PilieroMazza is pleased to announce that attorneys comprising three of the Firm’s core practice groups—Litigation & Dispute Resolution, Government Contracts, and Business & Transactions—successfully obtained reversal of a U.S. Small Business Administration (SBA) decision to deny forgiveness of a client’s Payment Protection Program (PPP) loan. The client obtained a PPP loan of more than $600,000 in early 2021 and sought forgiveness of the full amount of the loan in early 2022. After the client supplied additional information on several occasions in response to SBA’s direct inquiries, SBA eventually denied forgiveness, concluding that the company did not meet the eligibility criteria for the loan and, therefore, was not entitled to loan forgiveness.
The client retained PilieroMazza to file a Petition of Appeal to the SBA’s Office of Hearings and Appeals (OHA) and challenge the decision that it was ineligible for its PPP loan program. PilieroMazza’s team, including Matt Feinberg and Todd Reinecker (Litigation & Dispute Resolution), Katie Burrows (Government Contracts), and Cole Fox, (a summer associate working primarily with the firm’s Business & Transactions Practice Group), filed the Petition for Appeal in June, within the required 30-day appeal window.
To successfully appeal a PPP loan forgiveness denial, a company must show that SBA’s forgiveness decision was based on clear error of fact or law—a difficult, but not insurmountable standard. Relying on elements of the SBA’s Standard Operating Procedures for its loan programs, SBA’s Interim Final Rule governing the PPP loan program, and a direct comparison between the client and other similar companies for which the SBA approved PPP loan forgiveness, the appeal argued that the facts not only met the clear error standard but also that the SBA’s decision constituted arbitrary and capricious agency action.
In late July 2022, after consideration of the Petition for Appeal and an internal “second review” process, SBA’s Office of General Counsel reconsidered the denial of loan forgiveness and forgave the loan. Based on the favorable reconsideration by SBA, the appeal will be dismissed without a formal decision from OHA. “We couldn’t be more pleased for our client with the result of this appeal,” remarked Matt Feinberg, who led PilieroMazza’s team. “We have filed a number of PPP forgiveness appeals so far where we are waiting for decisions from SBA or OHA. SBA’s decision in this case shows that the PPP loan forgiveness appeal process can work for small businesses who met the eligibility requirements for the program and received an erroneous forgiveness decision.”
If you have questions regarding the PPP loan program or appealing the denial of forgiveness of a PPP loan, please contact Matt Feinberg or another member of PilieroMazza’s Litigation & Dispute Resolution or Government Contracts practice groups.