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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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$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.

$337,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

$337,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

Clients personally guaranteed an SBA 504 loan balance of $337,000.  The Third Party Lender had obtained a Judgment against the clients.  We represented clients before the SBA and negotiated an SBA OIC that was accepted for $30,000.

$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.

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