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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.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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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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.

$430,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$430,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral.  One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.

$50,000 SBA 7A LOAN - RESPONSE TO SBA OFFICIAL 60-DAY NOTICE

$50,000 SBA 7A LOAN - RESPONSE TO SBA OFFICIAL 60-DAY NOTICE

Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001.  The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.

Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice.  The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan.  Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt.  A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments.  As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

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.

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