Appealing SBA PPP Loan Review Decisions
There is a specific process taxpayers must follow if they want to appeal Small Business Administration (SBA) PPP loan review decisions. Full details can be found below.
In an interim final rule, the SBA has provided information on how a PPP borrower may appeal certain SBA loan review decisions to the SBA Office of Hearings and Appeals (OHA). An SBA loan review decision is an official written decision by the SBA, after SBA completes a review of a PPP loan, that finds a borrower:
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Was ineligible for a PPP loan.,
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Was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses.,
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Is ineligible for PPP loan forgiveness in the amount determined by the lender (except for the deduction of any Economic Injury Disaster Loan advance); and/or,
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Is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA.
Only final SBA loan review decisions can be appealed to OHA, and the appeal can only be made by the borrower. So, neither individual owners (e.g., a partner where the partnership applied for the PPP loan) nor a lender can request the appeal. A PPP borrower cannot file an OHA appeal of any decision made by a lender concerning a PPP loan but can request an SBA review when a lender denies the borrower’s loan forgiveness application in full. However, that request is for a review by SBA, not an OHA appeal.
An appeal petition must be filed within 30 calendar days after the earlier of (1) the borrower’s receipt of the final SBA loan review decision, or (2) the lender’s notification of the final SBA loan review decision. OHA will assign the case to either an Administrative Law Judge or an Administrative Judge.
The appeal petition, which should be limited to 20 pages, must include the following information:
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The basis for OHA’s jurisdiction, including, but not limited to, evidence that the appeal is timely filed.
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A copy of the SBA loan review decision that is being appealed, or a description of that decision if a copy is unavailable.
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A full and specific statement as to why the SBA loan review decision is alleged to be erroneous, together with all factual information and legal arguments supporting the allegations.
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The relief being sought.
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Signed copies of payroll tax filings actually filed with the IRS and the relevant state, for the relevant periods of time, if not provided with the PPP Loan Forgiveness Application, or an explanation as to why they are not relevant or not available.
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Signed copies of applicable federal tax returns actually filed with the IRS with appropriate schedules (e.g., IRS Form 1040 with Schedule C/F) documenting income for self-employed individuals or partners in a partnership, if not provided with the PPP borrower Application Form, or an explanation as to why they are not relevant or not available; and
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The name, address, telephone number, email address and signature of the appellant or its attorney.
An appeal by a PPP borrower of any SBA loan review decision does not extend the deferral period for making payments of principal and interest on the PPP loan.
CAUTION:
This appeals process is a formal, legal procedure, so borrowers who wish to appeal the SBA’s decision to the OHA will need to engage the services of an attorney. That being said, clients who have been denied loan forgiveness may still turn to their tax return preparers for an explanation. Before providing any advice to these clients (other than that should hire an attorney to handle the issue), preparers are urged to read the complete interim final rule to better understand the process. The ruling contains specific information on where to file the petition, timing for providing records and of the appeals process, and how to appeal the administrative judge’s decision.