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How Do I Appeal Partial PPP Loan Forgiveness? SBA Details New Process

February 09, 2022

Attention Paycheck Protection Program (PPP) borrowers…did you receive partial loan forgiveness from your lender? The Small Business Administration (SBA) has released a new process for appealing the decision. Here’s what you should know.

If you were denied full forgiveness on your PPP loans, you’ll want to read up on new rules from the SBA.

What’s new?

Due to multiple inquiries from borrowers, the SBA has detailed a new appeal process.

The new process allows borrowers to request (through their lenders) an SBA review of their loan if:

  1. They received a partial forgiveness decision from the lender that they disagree with or
  2. They were required by their lender to apply for less forgiveness than the full PPP loan amount.

Note that if the borrower applied for less than full forgiveness on their own (without the assistance of a lender) the new process does not apply.

30 day requirement

On a go forward basis, borrowers now have 30 calendar days (after receipt of the final SBA loan review decision) to file an appeal if they received notice of partial forgiveness.

If you previously received partial forgiveness approval, your lender has 30 calendar days from receipt of the SBA’s notice to inform you of your right to an SBA review. Borrowers will then have 30 days to notify their lender that they wish the SBA to review the prior partial forgiveness decision.

Do borrowers have to continue making payments on the loan?

Yes. If the SBA chooses to review your loan, you must continue making payments on the remaining balance.

However, if the SBA rules that the loan should have received full forgiveness, your lender will be required to refund those payments to you.

What happens if the SBA grants full forgiveness?

In the event the SBA determines that you are entitled to forgiveness in an amount that exceeds the lender’s original approval, the SBA will send a supplementary forgiveness payment to your lender to account for the difference (and re-amortize the PPP loan as well).

What if the SBA denies your appeal?

In this scenario, the SBA will issue a notice to the lender that the forgiveness amount is correct. The lender is required to notify you of this notice within five business days and you will continue to pay on the loan as previously scheduled.

What if the SBA determines that you were granted too much forgiveness?

In this scenario, the SBA will issue a final loan review decision to your lender. Your lender must then provide a copy of the payment notice and the final SBA loan review within five business days. Once that’s taken care of, your lender is required to remit the excess loan amount previously forgiven to the SBA (and once again re-amortize the PPP loan).

Questions? Contact us, we’d be happy to help.

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