Millions of small businesses applied for and received loans under the Paycheck Protection Program (PPP), which was a temporary program established under the CARES Act enacted by Congress to provide relief to America’s small businesses due to the devastating effects of COVID-19.  But some businesses were denied loans and others are seeking forgiveness, only to find that they were deemed ineligible for full or partial forgiveness.  A new rule may provide small businesses with options to appeal these decisions.

An interim final rule is scheduled for publication in the Federal Register on August 27, 2020, regarding appeals of SBA loan review decisions under the PPP.  The unpublished version can be found here.  The rule provides that SBA’s loan review decision is considered an official written decision by SBA and certain decisions are appealable to SBA’s Office of Hearings and Appeals (OHA).  Such “decisions” include findings by SBA that either the borrower:

  1. was ineligible for a PPP loan;
  2. was ineligible for the amount received or used the loan proceeds for unauthorized uses;
  3. is ineligible for loan forgiveness in the amount determined by the lender in its decision issued to SBA; or
  4. is ineligible for loan forgiveness in any amount when the lender issued a decision to SBA.

It is important to note that only final SBA decisions are appealable to OHA; decisions made by a lender concerning a PPP loan are not appealable (although, such borrowers can request an SBA review of a lender decision which could lead to an SBA final decision). 

Critically, any appeal must be filed within 30 calendar days after receipt of SBA’s final loan review decision or notification by the lender of SBA’s final loan review decision, whichever is earlier.  And, the appeal must be filed by the borrower, not the owners or lenders.  The rule contains specific requirements as to the information that must be included in the appeal petition, and failure to include any of the required elements may result in dismissal.  We strongly recommend that you seek counsel before filing an appeal.

The rule to be published tomorrow supplements an interim final rule that is already in effect.  While SBA seeks comments on this rule, it is important to reiterate that this appeals process is already available for borrowers.  If you received a final SBA loan review decision and would like to discuss the possibility of an appeal, please contact the authors, Peter Ford or Meghan Leemon, or a member of PilieroMazza’s Government Contracts Group.  We also invite you to visit the Firm’s COVID-19 Client Resource Center to access further resources to help your business navigate the effects of the COVID-19 pandemic. If you need immediate assistance, please contact us at [email protected].