PPP Borrowers BEWARE! 

Increasingly the Small Business Administration (“SBA”) sends Paycheck Protection Program (“PPP”) loan borrowers FINAL SBA LOAN REVIEW DECISION letters. These letters look similar to the SBA’s requests for additional documents and information, but they are different. Borrowers must file a detailed appeal petition within 30 days to appeal these FINAL DECISIONS or they are FINAL and borrowers will be required to repay their PPP loans. It takes time to prepare an appeal petition, which means it is important to act as soon as you receive a letter looking like this:

Why is it important to act immediately?

• Because this is a final, appealable administrative decision.
• Because the borrower only has 30 calendar days to file an appeal, which is a very detailed petition, or it will lose its right to challenge the SBA decision.
• And because that deadline cannot be extended, not even by a judge.

What should borrowers do upon receipt of this SBA letter?

Contact an attorney immediately.

• Borrowers have only 30 calendar days from the date they receive the SBA notice within which to file an appeal petition. These petitions take time to prepare. They must include all grounds upon which the SBA decision is alleged to be in error, citations to facts and legal authorities, and should be supported by exhibits.
• The 30-day deadline to file an appeal cannot be extended – not even by an administrative law judge.

Although a borrower may ask its bank to contact the SBA to reconsider its decision, the deadline for an appeal is not suspended or extended by doing so.

• Do not wait to contact an attorney until after you hear from the SBA. By that time, it may be too late to prepare the documents necessary to appeal.
• Further, the SBA final decision ends all reviews by the SBA. It closes the SBA file, except for an appeal. Thus, while there may not be anything to lose by asking the SBA to reconsider, the likelihood is that the SBA will not take any further action.
  • We are aware of one instance in which the SBA notified a client that its loan forgiveness application was being reviewed by the SBA “Higher Authority Team” after the borrower had been notified of the SBA “final decision” denying loan forgiveness. At our request, the SBA clarified that its new review of the loan rescinded its prior notice of a final decision and thus there was no deadline for appeal. Absent something in writing from the SBA notifying a borrower that the final decision has been vacated or rescinded, the borrower’s 30-day deadline to perfect an appeal remains intact.

Federal law governing appeals of SBA final decisions

The SBA letters notify borrowers that, “Pursuant to 13 CFR § 134.1201(b), the borrower has the right to appeal to SBA’s Office of Hearings and Appeals (“OHA”) a final SBA loan review decision . . .”

• This notice is not in bold or highlighted. Some borrowers skim over it or do not appreciate its significance.
• Some borrowers fail to file a timely appeal because they did not read or understand that this letter is a “final decision” from which an appeal is the only remedy to challenge the SBA’s determination.

The SBA’s federal regulation setting forth the requirements for an appeal petition states:

(a) Content. The appeal petition must include the following information:

(1) A copy of the final SBA loan review decision that is being appealed and the date it was received by the borrower. A Notice of Paycheck Protection Program Forgiveness Payment does not provide a borrower with a right to appeal to OHA.

(2) A full and specific statement as to why the final SBA loan review decision is alleged to be erroneous, together with all factual information and legal arguments supporting the allegations. There is no required format for an appeal petition.

However, the appeal petition must meet the following requirements:

(i) The maximum length of an appeal petition (not including attachments) is 20 pages. A table of authorities is required only for petitions citing more than 20 cases, regulations or statutes.

(ii) Clearly label any exhibits and attachments.

(3) The name, address, telephone number, email address and signature of the appellant or its attorney.

Subparagraph (b) states that “An appeal petition that does not contain all of the information required by paragraph (a) of this section may be dismissed, with or without prejudice, at the Judge's own initiative, or upon motion of SBA.”

13 CFR § 134.1204.

13 CFR § 134.1205 requires that the judge dismiss an appeal if “it is untimely.”

We can help

Lawyers at Dentons can help borrowers ensure that their rights are protected. We have lawyers who are experienced in CARES Act pandemic relief programs, including the Paycheck Protection Program. We have extensive experience with SBA audits of PPP loans and loan forgiveness applications. Our lawyers have written articles and taught seminars about PPP loans and appeals of SBA decisions.

But, we can only help if you contact us immediately!  It takes time to research the SBA’s final decision, review all of the relevant facts, research specific legal issues, and prepare the appeal petition and exhibits.

And, there are NO EXTENSIONS of TIME within which to file the appeal petition. Borrowers have 30 calendar days from the date they receive the SBA letter. So, don’t delay. Contact us immediately upon receipt of an SBA final decision.