Your business still has to repay your PPP loan if it hasn’t been forgiven. Your PPP loan is still a loan, and if it was not forgiven then your business owes it. If you haven’t repaid your PPP loan in full, there are only two ways to get that situation resolved. Either you will repay the remaining amount, or you will win on appeal to get your denial rescinded. It’s that simple. Remember, however, that if your application was denied, you are not out of options. There is a strict deadline for fighting a denial, though. But if that doesn’t answer your question, keep reading.
Why Does It Matter Who Denied You
When you apply for PPP forgiveness, there’s a lot of process. The denial could come from the lender (your bank, credit union, or fintech), or from the SBA. Why does it matter who denied you? Because it determines how you should move next. If it was the lender, you’re dealing with a banking decision. If it was the SBA, you’re looking at a federal program issue. The lender can say no. If that happens, you might not even have a right to appeal it. It’s worth asking why, but options may be limited. Call your lender to figure out why it was denied and what your options are.
Final Decision Letter
The SBA can say no. If the SBA denied your application, you will receive a Final Decision Letter in the mail. That decision letter will have a date on it. The date on this letter is very important. You have 30 days from that date to send a reply and file an appeal. If you don’t do it in time, you may lose your right to appeal and you will have to repay your entire loan balance.
Here’s how to look at your decision letter. On the first page, there’s an indented section in bold letters that tells you why the SBA denied your forgiveness. Focus on this section first. What are the reasons? Understand the reasons. Everything you do next has to answer them. If necessary, read your original loan application to see what your answers looked like.
Prepare Your Appeal
Ok, you know why the SBA said no. Now what? It’s up to you to demonstrate that the SBA was clearly wrong. Keep that burden in mind. You will have to submit evidence, do research, and develop legal arguments. Then research whether those reasons are valid by reviewing the law, regulations and decisions that are potentially relevant to the SBA’s decision. Your appeal will be heard by the Office of Hearings and Appeals (OHA), which publishes prior opinions on its website. Read some of them, because there are precedents for many of the questions you may ask.
What facts and law should you use in your appeal? The CARES Act gave the SBA authority to create PPP, which defines eligibility for the loan and forgiveness. The Code of Federal Regulations clarifies those eligibility rules and how the SBA operates. So if you do decide to file an appeal or case, you will need to have some basic knowledge of the rules and how to apply them. You’ll need to explain why the SBA is wrong, but you must also know why you are right. Put those rules next to your own paperwork from the original application and the denial, and you have the makings of a case.
We recommend you hire a qualified attorney to prepare your appeal. A denial that stands at the OHA has to go to a higher court, and that is where the expense climbs.
Your appeal can be up to 20 pages long. You will need to include legal authority, evidence, and the final decision letter. Otherwise, your appeal may be summarily dismissed. A dismissal costs you the appeal itself. Twenty pages sounds like plenty until you start writing, and a fair amount of editing is required. It has to be dense. State the facts plainly and skip the long explanations.
The appeal must be made on the behalf of the company, since a PPP loan is a business loan and not a personal one. Your representative can be a shareholder owner, officer, or attorney. It cannot be a CPA, lender, or general employee.
Next, go to appeals.sba.gov. Create your account. Answer the questions. Upload your appeal, your decision letter, and all your evidence, before the 30-day deadline.
After that, send a copy of your appeal to your lender. Your lender may be able to defer your repayments until you have a ruling on your appeal. How long the SBA takes to decide varies. Check the portal several times a week and respond to requests on time. Missing a deadline at this stage can sink the appeal and leave you repaying the loan in full.
What happens if I am denied? You can request a reconsideration. If that doesn’t work, you can go to federal district court. So let’s say your loan is not forgiven. Your appeal fails, the reconsideration fails, now you go to court. The cost and the hassle multiply at that point, which is why the first appeal deserves your full attention.
So, does your business still owe the loan? Unless you win an appeal, yes. The business can’t just walk away from it. The business has to pay the PPP loan back. For many small businesses, that bill arrives when they may not have the cash flow to cover the loan. That is exactly why the 30 days matter. If your Final Decision Letter is sitting on your desk, check the date on it today.
