Small Business Administration Releases Guidance on the Appeals Process for Paycheck Protection Program Loans – Duane Morris
On August 11, 2020, the Treasury Department and Small Business Administration (SBA) released an interim final rule that details the appeals process for Paycheck Protection Program (PPP) loan borrowers for SBA loan review decisions regarding eligibility and/or forgiveness of a PPP loan. The interim final rule builds upon prior guidance released by the SBA on the review process for lenders and the SBA of PPP loans. See our prior Alert for an overview of that guidance.
Based on the new guidance, PPP loan borrowers should note the following key highlights:
- PPP loan borrowers will have access to an appeals process once a final SBA loan decision (delivered in written form) is received after SBA completes a review of a PPP loan. Note that borrowers may only appeal final SBA loan review decisions, and not any decision made by the SBA or lender.
- Borrowers are required to prepare an appeal petition, which must include a “full and specific statement” as to the error in the SBA loan review decision.
- The burden of proof is on the borrower to prove, by a preponderance of the evidence, that there was a clear error of fact or law.
- Appeals will be made to the SBA Office of Hearings and Appeals (OHA) and assigned to a judge, and the SBA and the borrower will have the opportunity to review a written record. In-person proceedings are not required, unless ordered by the judge.