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What Can I Do If I Receive a Denial of a PPP Loan Application?

If your lender denied a PPP loan application you have rights to review and appeal. Our experienced SBA attorneys can guide you through the process.

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What Can I Do If I Receive a Denial of a PPP Loan Application?

If the Small Business Administration (SBA) denied your Payment Protection Program (PPP) loan application, you have the right to file an appeal with the SBA Office of Hearings and Appeals (OHA).  Read on to learn more about your appeal rights upon the denial of a PPP loan application.

SBA PPP Loan Denied

The SBA Denied Your PPP Loan  Application

You will have filed your application for your PPP loan.  Unfortunately, the lender denied your application. Importantly, the denial may mean the end of your business. It may result in the termination of employees.  As such, the denial of your PPP loan application can have devastating consequences.  Nevertheless, you can appeal the decision.  However, you must jump through some hoops in order to successfully appeal and denied PPP loan application.

The SBA Review

You can only have a decision by the SBA appealed to an administrative law judge.  Unfortunately, you cannot appeal the decision of the lender to an administrative law judge first.  Therefore, you will have to request a review of the decision first by the SBA.  If the SBA, after its review, also denies your application, you can then appeal that decision to the SBA Office of Hearings and Appeals.   You must request a review within 30 days.

Who Reviews the Denial of a PPP Loan Decision?

If your review is unsuccessful, you file your appeal with the SBA's Office of Hearings and Appeals or OHA.  Thereafter, the administrative law judge (ALJ) receives the case.  In short, an ALJ presides over administrative hearings with the government.  Keep in mind, the SBA will appoint an attorney to represent its interests in the appeal as well.  As such, you should also have an experienced attorney representing your interests.

What is the Timeline to File Your Appeal?

Once the SBA issues its review decision, you have limited time to file your appeal.  To that end, you must file your appeal within 30 calendar days after your receipt of the final SBA loan review decision.  Alternatively, you only have 30 days from your notification by the lender of the final SBA loan review decision.  However, the deadline starts running from whichever notification you receive first.

What Is Your Burden of Proof?

In order to successfully appeal, you must prove that the SBA based its loan review decision on clear error of fact or law.  Furthermore, the burden of proof rests with you.  Thus, you must show the SBA's decision was in error by a preponderance of the evidence.

How Do You Prove Error of Fact or Law?

To meet your burden of proof, you will need to submit various documents described by SBA rules.  Moreover, you will have to include a legal brief showing how the facts and law prove the SBA made an error.

Contact Protect Law Group Today For a Case Evaluation About Denial of PPP Loan Application

Our attorneys have the experience to aggressively represent you in front of the SBA and the OHA.    Contact our offices today to set up your evaluation with one of our attorneys.

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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure

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$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $150,000.  He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made.  The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.

The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.

Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.

$310,000 SBA 7A LOAN - SBA OIC TERM WORKOUT

$310,000 SBA 7A LOAN - SBA OIC TERM WORKOUT

Client personally guaranteed an SBA 7(a) loan for $100,000 from the lender. The SBA loan went into early default in 2006 less than 12 months from disbursement. The SBA paid the 7(a) guaranty monies to the lender and subsequently acquired the deficiency balance of about $96,000, including the right to collect against the guarantor. However, the SBA sent the Official 60-Day Due Process Notice to the Client's defunct business address instead of his personal residence, which he never received. As a result, the debt was transferred to Treasury's Bureau of Fiscal Service where substantial collection fees were assessed, including accrued interest per the promissory note. Treasury eventually referred the debt to a Private Collection Agency (PCA) - Pioneer Credit Recovery, Inc. Pioneer sent a demand letter claiming a debt balance of almost $310,000 - a shocking 223% increase from the original loan amount assigned to the SBA. Client's social security disability benefits were seized through the Treasury Offset Program (TOP). Client hired the Firm to represent him as the debt continued to snowball despite seizure of his social security benefits and federal tax refunds as the involuntary payments were first applied to Treasury's collection fees, then to accrued interest with minimal allocation to the SBA principal balance.

We initially submitted a Cross-Servicing Dispute (CSD) challenging the referral of the debt to Treasury based on the defective notice sent to the defunct business address. Despite overwhelming evidence proving a violation of the Client's Due Process rights, the SBA still rejected the CSD. As a result, an Appeals Petition was filed with the SBA Office of Hearings & Appeals (OHA) Court challenging the SBA decision and its certification the debt was legally enforceable in the amount claimed. After several months of litigation before the SBA OHA Court, our Firm Attorney successfully negotiated an Offer in Compromise (OIC) Term Workout with the SBA Supervising Trial Attorney for $82,000 spread over a term of 74 months at a significantly reduced interest rate saving the Client an estimated $241,000 in Treasury collection fees, accrued interest (contract interest rate and Current Value of Funds Rate (CVFR)), and the PCA contingency fee.

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