Sean Bryan Authors Column on Guidance on Appeal of SBA’s PPP Loan Decisions

Sean Bryan’s column—entitled “"New Guidance on Appeal of SBA’s PPP Loans”—addresses additional information regarding Paycheck Protection Program loans and procedures to appeal SBA loan review decisions.

On August 11, the U.S. Treasury Department and Small Business Administration issued three new pieces of guidance regarding Paycheck Protection Program loans.  In the FAQs for PPP loans, new questions 50 and 51 were added stating that payment or non-payment of fees to an agent does not affect the SBA’s guarantee of a PPP loan or payment of fees to lenders and that eligible payments for group health care benefits include insurance premiums for vision and health benefits.  The SBA also added to the FAQs for PPP Loan Forgiveness several FAQs providing guidance to lenders regarding any portion of PPP loans not forgiven by reason of Economic Injury Disaster Loans made to the PPP borrower.  

The most substantive of the new guidance is a new Interim Final Rule establishing procedures to appeal SBA loan review decisions relating to PPP loans, although there is still no guidance on the substance or criteria of SBA reviews.  The SBA may undertake a loan review at any time for a PPP loan of any size in the SBA’s discretion, including those less than $2 million.  A lender is required to give a borrower notice of a SBA review within 5 days after the lender receives notice from the SBA.  An appeal to the SBA’s Office of Hearings and Appeals (“OHA”) is permitted only of final SBA review decisions, which require an official written decision by the SBA, and this process is not available for review or appeal of lender decisions regarding PPP loans.   

Only a borrower may pursue an appeal; neither owners of a borrower nor lenders have standing to appeal.  An appeal must be filed within 30 days after the earlier of borrower’s receipt of the SBA’s loan review decision or notice from lender of the review decision.  And once the SBA has reimbursed a lender for the forgiveness amount (which must occur within 90 days after the lender issues a forgiveness decision to the SBA and requests payment unless the SBA undertakes a review of the loan or loan application), no appeal is permitted.    The standard of review is whether the SBA made a clear error of fact or law, and the borrower has the burden of proof.  Generally, there is no opportunity for discovery, hearings, witnesses, or multiple back and forth responses. 

The OHA judge, however, has limited discretion to permit such proceedings.  The borrower and SBA may jointly request alternative dispute resolution, which will put the appeal process on hold pending the outcome of such ADR.  The OHA judge is required to issue a decision within 45 days after the record is closed and generally becomes the final decision of the SBA after 30 days. 

An OHA judge’s decision may be appealed to the SBA Administrator, and then to a federal court.  Even if successful, however, an appeal does not extend the deferral period of a PPP loan after the SBA’s final review and a borrower may not recover attorney’s fees arising from the appeal.  Additionally, the OHA’s final decision will be published on the OHA’s website in full unless redaction of confidential information is requested by the borrower, but the new rules provide that confidential information contained in the actual decision will not be available to the public pursuant to the Freedom of Information Act.

For additional information on the Paycheck Protection Program, click on the links below: 


PPP Loan Forgiveness FAQs -

Interim Final Rule -