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What Happens If a PPP Loan is Not Forgiven?

If your application for PPP loan forgiveness is denied by the SBA you have appeal rights. Learn more about how to assert your rights to an appeal.

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What Happens If a PPP Loan is Not Forgiven?

If the Small Business Administration (SBA) denied your Payment Protection Program (PPP) forgiveness 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 for your PPP loan forgiveness.

PPP Forgiveness Appeal

The SBA Denied Your PPP Loan Forgiveness Application

You will have filed your application to forgive your PPP loan.  Unfortunately, the lender denied your forgiveness application. What if your loan isn't forgiven in full? You will have to repay any amount of the PPP loan  at a 1% interest over a 5 year term. However, loan payments will be deferred for six months but will start incurring interest immediately. Moreover, PPP loans have no fees and no prepayment penalties.  Nevertheless, you can appeal the decision.

What Can Be Reviewed?

You can only have a decision by the SBA reviewed.  Therefore, you must request a review by the SBA within 30 days of the lender's decision.  If the SBA denies after review, you can proceed to an appeal.  Furthermore, you can appeal based on several grounds as follows:

  • Was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses
  • Is ineligible for PPP loan forgiveness in the amount determined by the lender in its full or partial approval decision issued to SBA
  • Is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA

If the SBA based its denial on one of these factors you can appeal the decision.

Who Reviews the PPP Loan Forgiveness Decision?

You file your appeal with the SBA's Office of Hearings and Appeals or OHA.  Thereafter, the OHA assigns your case to an administrative law judge (ALJ).  In a nutshell, an ALJ presides over administrative hearings with the government.  Furthermore, the SBA will appoint an attorney to represent its interests in the appeal.  As such, you should also have experienced legal representation advocating for your interests.

When Do You Have to File Your Appeal?

You only have a short time to file your appeal.  As such, 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.  Keep in mind, the deadline starts running from whichever notification you receive first.

What Do You Have to Prove?

In order to successfully appeal, you must prove that the SBA based its loan review decision on clear error of fact or law.  Furthermore, you have the burden of proof.  To that end, you must show such 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 consultation About PPP Loan Forgiveness

Our attorneys have the experience to assertively represent you in front of the OHA.  We have argued scores of appeals on behalf of our clients.  Contact our offices today to set up your consultation 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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Clients personally guaranteed SBA 504 loan balance of $750,000.  Clients also pledged the business’s equipment/inventory and their home as additional collateral.  Clients had agreed to a voluntary sale of their home to pay down the balance.  We intervened and rejected the proposed home sale.  Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.



The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.



The client was personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture.  After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars.  We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA).  As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.

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