My PPP Loan Forgiveness Was Denied. How Do I Appeal?

October 1, 2021
woman sitting at laptop in front of plant

In its first two months of operation, the Small Business Administration’s PPP Loan Forgiveness Portal  accepted at least one million applications for PPP loan forgiveness made by small businesses, accounting for $17 billion of relief. Overall, the agency has made payments on 6.76 million applications since the program’s inception. The portal was designed to streamline the application process and reduce complicated paperwork and bureaucratic gridlock. Despite the deluge in applications over the past two months of the portal’s operation, more than five million businesses with eligible loans under $150,000 still have yet to submit an application for relief. In 2020, 91% of all eligible PPP loans corresponded to submitted applications for loan forgiveness. Recently revealed metrics indicate that there are still tens of billions in PPP loans that have yet to be forgiven. If your business has not yet applied for loan forgiveness, apply today.

Once a business applies for loan forgiveness, the Small Business Administration (SBA) issues a final loan review decision. If your loan has been denied forgiveness, a specification will likely list the reason as one of the following:

  • You were not initially eligible for a PPP loan;
  • You were not eligible for the PPP loan in the amount that you received;
  • You were not eligible for the forgiveness amount the lender approved for your business; or
  • You were not eligible for any forgiveness amount because the original lender submitted a denial decision to the SBA.

How can you appeal the denial of PPP loan forgiveness?

You may submit an appeal petition to challenge these determinations. A petition for appeal may be no longer than 20 pages, excluding attachments, and must comply with several requirements. It must contain a statement of the basis of SBA’s jurisdiction (including 13 CFR §134.1204), a copy of the SBA decision that is being appealed or a description of the decision if a copy is unavailable, the requested outcome, and a complete legal and factual argument of why the decision of the SBA was incorrect.  The petition must also request a specific outcome and contain copies of all payroll tax filings submitted to the IRS for the relevant time period.  The appeal must also contain signed copies of state quarterly wage reports and unemployment tax filings submitted to the state for the relevant period, as well as signed quarterly business and wage reports. If payroll tax filings or other documents are missing, unavailable, or otherwise cannot be submitted, an explanation in the appeal must set out the reasons the document(s) cannot be submitted. An appeal must also include the appellant’s full contact information and serve a copy of the petition upon the Associate General Counsel for Litigation of the U.S. Small Business Administration by mail, email, or fax. Notably, only a PPP loan applicant has standing to appeal, not an individual owner(s) of the business.

The window to appeal PPP loan forgiveness denial is brief

Timing is key and the appeal window is relatively brief. Ensure that you do not miss the deadline to file an appeal. An appeal must be submitted within 30 calendar days after the earlier of either: (i) receipt of the final SBA loan review decision, or (ii) notification by the lender of the SBA loan decision. Once the appeal is submitted, it may be assigned to an Administrative Law Judge. Then, the Judge will issue a notice and order setting dates for publishing the administrative record of everything the SBA considered in reaching its decision.  A party may request a protective order to preserve the privacy of certain information in the record that otherwise may be disclosed in a public decision. Typically, this timeline will be set at 20 calendar days, and the record will close 45 days from the date of the appeal unless additional time is requested and granted. The Judge then typically issues a decision within 45 days of the close of the record. Next, a borrower may wish to preserve a right to an additional level of review in federal court by requesting review by the Administrator.  This additional step preserves a right to an additional level of appeal in federal court by ensuring the applicant exhausts administrative remedies.

If you would like to proceed with an appeal, we recommend enlisting the help of one of KJK’s Corporate Attorneys.