SBA Details Process to Appeal Partial PPP Loan Forgiveness Decisions

February 4, 2022

The U.S. Small Business Administration (SBA) recently issued a procedural notice detailing a new process that Paycheck Protection Program (PPP) borrowers who received partial loan forgiveness can use to appeal their lender's decision.

If a borrower received a partial forgiveness decision from their lender they do 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, the borrower can now request an SBA review of their loan through their lender. However, the process does not apply if the borrower applied for less than full forgiveness on their own.

The notice states that lenders informing borrowers of SBA approval of partial loan forgiveness must notify the borrowers that they have 30 calendar days from receipt of the notification to submit a request for review of the loan by the SBA. For borrowers who previously received partial forgiveness approval from their lender, or whose lender required a PPP forgiveness application that was less than the full loan amount, lenders have 30 calendar days from receipt of the procedural notice to notify borrowers of their right to receive a review. Borrowers will then have 30 days from receipt of the lender notification to submit their request for a review.

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 payment to the lender and re-amortize the loan.

If the review agrees with the forgiveness amount approved by the lender, the SBA will issue a payment notice to the lender that the forgiveness amount has been upheld. The lender must then provide this notice to the borrower within five business days.

If the review results in a lesser forgiveness amount, the SBA will issue a final loan review decision to the lender, who must provide a copy of the payment notice and, if applicable, the final loan review decision, to the borrower within five business days. The lender must then remit the excess amount of the loan previously forgiven and re-amortize the loan.

The borrower must continue to make payments on the remaining balance of the loan even if they are selected for a review. The lender will be required to refund those payments if the SBA rules that the loan should have received full forgiveness.