SBA OIG and DOJ Signal Escalating Enforcement of COVID-Era SBA Loans in 2026
SBA OIG and DOJ Signal Escalating Enforcement of COVID-Era SBA Loans in 2026. Learn what to expect and how Protect Law Group can help with COVID Loan Audits
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.
Book a Consultation CallPPP Forgiveness Appeal
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.
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:
If the SBA based its denial on one of these factors you can appeal the 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.
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.
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.
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.
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.
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
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.
Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.
The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.
The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.
Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) default in the amount of $150,000 on behalf of Illinois-based client. After the business permanently closed due to the economic impacts of the pandemic, the owners faced potential personal liability if the business collateral was not liquidated properly under the SBA Security Agreement.
We guided the client through the SBA’s Business Closure Review process, prepared a comprehensive financial submission, and negotiated directly with the SBA to release the collateral securing the loan. The borrower satisfied their collateral obligations with a payment of $2,075, resolving the SBA’s security interest.
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