Updated: Dec 30, 2022
May 19, 2021 Written by: Christopher M. Leddy, Esq. and Erik Derr, Esq.
Denied a loan or forgiveness under the Paycheck Protection Program (“PPP”)? Applicants and/or borrowers still have recourse to appeal. The U.S Small Business Administration (“SBA”) has issued protocols for borrowers denied a PPP loan or facing a claim that their PPP loan is not eligible for forgiveness. In order to obtain a review of a final SBA decision, however, applicants and/or borrowers must overcome a number of procedural hurdles to make sure their subject application gets its fair shake.
On what basis can an appeal be filed?
While the SBA may review a PPP loan decision at any time on its own initiative, borrowers of PPP loans may appeal a SBA loan decision that finds a borrower ineligible for a PPP loan, ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses, is ineligible for PPP loan forgiveness in the amount determined by the lender, or is ineligible for PPP loan forgiveness in any amount. Once a final SBA loan decision is reached, that decision may be appealed to the SBA Office of Hearings and Appeals (the “OHA”).
There are a few things to keep in mind when filing an appeal. First, only the borrower on a loan for which the SBA has issued a final loan review decision has standing to appeal the decision to the OHA. Individual owners of a borrower and lenders do not have standing to appeal an SBA loan review decision. Second, the appeal must be filed before the earlier of two dates: (1) 30 days from the borrower’s receipt of the final SBA loan review decision, or (2) 30 days from notification by the lender of the final SBA loan review decision. The standard of review for an appeal of an SBA final decision is whether the SBA loan review decision was based on clear error of fact or law, which the borrower has the burden of proving by a preponderance of the evidence.
What must an appeal include?