SBA Outlines Process For Partial PPP Loan Forgiveness Decision Appeals

The U.S. Small Business Administration (SBA) has detailed a new process for borrowers to appeal decisions regarding their Paycheck Protection Program (PPP) loans that were only partially forgiven by the lenders.

Now borrowers can request, through their lender, an SBA review of their loan if they received a partial forgiveness decision from the lender they did not agree with, or if they were required by their lender to apply for forgiveness in less than the full amount of the PPP loan. However, the new process does not apply if the borrower applied for less than full forgiveness of their own volition.

For borrowers who had previously received partial forgiveness approval from the lender, or whose lender required a PPP forgiveness application that was less than the full amount of the PPP loan, lenders have 30 calendar days from receipt of the SBA’s procedural notice to notify borrowers of their right to receive an SBA review. Borrowers will then have 30 days from the receipt of the lender notification to submit their request through the lender for the SBA loan review. Lenders informing borrowers of SBA approval of a partial loan forgiveness must notify the borrowers that they have 30 calendar days from receipt of the notification to submit their request through the lender for the SBA to review the loan due to new SBA guidance. Even if the SBA selects the loan for review, the borrower must continue to make payments on the remaining balance of the loan, as the loan is not deferred. The lender will be required to refund those payments if the SBA rules that the loan should have received full forgiveness.

If the SBA’s review determines the borrower is entitled to forgiveness in an amount greater than the lender’s partial approval decision and the SBA has previously remitted a partial forgiveness payment to the lender, the SBA will remit an additional forgiveness payment to the lender to make up the difference and re-amortize the PPP loan to adjust for the difference. If the SBA loan review agrees with the forgiveness amount approved by the lender, the SBA will issue a payment notice within five business days to the lender that the forgiveness amount has been upheld. If the SBA loan review results in a lesser forgiveness amount, the SBA will issue a final loan review decision to the lender, which must then provide a copy of the Payment Notice and, if applicable, the final SBA loan review decision, to the borrower within five business days. The lender must then remit the excess amount of the loan previously forgiven to the SBA and re-amortize the PPP loan to adjust for the difference.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.

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