The blog post from HRSBDC discusses the complexities of the PPP forgiveness process, including the steps involved in the PPP forgiveness appeal process if a loan is not forgiven. The SBA has made a total of 11.2 million PPP loans, with 3.1 million already forgiven and 182,000 under review. If a loan is not forgiven, the borrower can appeal the decision with the SBA, and if denied again, they have 30 days to appeal to the SBA’s Office of Hearings and Appeals. This may require significant documentation to support the debt’s forgiveness. If the borrower still disagrees with the decision, they can challenge it in a federal district court. The blog post emphasizes that the appeal process can change at any time and may take years to navigate, and recommends seeking legal or accounting assistance if a denial occurs.

PPP Forgiveness Process Overview

From HRSBDC By Mike Austin

The PPP forgiveness process can be just that….a process. To date, the SBA has not provided significant guidance on how borrowers can apply for forgiveness and even less guidance for the appeals process if forgiveness is denied.

Current Status of PPP Loans

To date, the SBA made a total of 11.2 million PPP loans for approximately $788.1 billion, and of those loans, 3.1 million loans have been forgiven, with an additional 182,000 still under review. Ultimately there will be forgiveness applications that will not be forgiven, and for those borrowers, the following steps may be needed to be taken to seek resolution of the forgiveness process. This includes:

Steps to Seek Resolution

  • The first level of denial can come from the lender. If that happens, the borrower can appeal their lender’s decision with the SBA by requesting that the agency review the lender’s decision
  • If the agency denies forgiveness, the borrower has 30 days to appeal the decision to the SBA’s Office of Hearings and Appeals (OHA). This will require the borrower to compile a significant amount of financial and other documents that support forgiveness of the debt
  • If the borrower believes the OHA decision is incorrect, they can file a challenge in a federal district court, and if needed, can seek redress in the court of appeals, followed by the US Supreme Court
  • Borrowers are advised that the SBA will not likely reverse their denial unless they provide a significant amount of supporting documentation
  • If the SBA is considering full denial, the borrower will have only 10 days to provide a “document dump” to support their case
  • If denial occurs, it is also recommended that borrowers seek legal and/or accounting assistance in creating a 3rd party memo supporting the necessity of the loan
  • Finally, the appeals process, like many aspects of the approval process for PPP loans is subject to change by the SBA at any time, which could impact this guidance. Also, the appeals process could take years to negotiate

As the SBA updates the forgiveness process, we will keep you posted.

Question & Answer

What is the first step if a PPP loan forgiveness is denied?

If a PPP loan forgiveness is denied, the borrower can appeal their lender’s decision with the SBA by requesting that the agency review the lender’s decision.

What happens if the SBA denies forgiveness after the lender’s decision?

If the SBA denies forgiveness after the lender’s decision, the borrower has 30 days to appeal the decision to the SBA’s Office of Hearings and Appeals (OHA), requiring significant financial and other document compilation.

What can borrowers do if they disagree with the OHA decision?

If borrowers disagree with the OHA decision, they can file a challenge in a federal district court, and if needed, can seek redress in the court of appeals, followed by the US Supreme Court.

What is recommended if the SBA is considering full denial of forgiveness?

If the SBA is considering full denial of forgiveness, borrowers should provide a “document dump” within 10 days to support their case and seek legal or accounting assistance for a 3rd party memo.