The Small Business Administration (SBA) has issued a new final rule (Rule) addressing the procedures for borrowers of a Paycheck Protection Program (PPP) loan to appeal final SBA PPP loan review decisions to the Officer of Hearings and Appeals (OHA).

According to the Rule, a borrower may appeal a “final SBA loan review decision,” which is described as an official written decision by the SBA finding that the borrower

1. was ineligible for a PPP loan;
2. was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses;
3. is ineligible for PPP loan forgiveness in the amount determined by the lender in its full approval or partial approval decision issued to the SBA; or
4. is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to the SBA.

Borrowers cannot directly appeal a lender’s decision concerning a borrower’s application for PPP loan forgiveness to the OHA. They can only do so for an SBA decision.

A borrower has 30 calendar days from the actual receipt of a final SBA loan review decision to appeal the decision. If a borrower timely files an appeal, the deferment period of the PPP loan is extended until the OHA issues a final decision. The Rule clarifies that a borrower must provide their lender with a copy of the appeal to obtain this extended deferment.

A borrower’s appeal petition must include all of the following:

1. a copy of the final SBA loan review decision that is being appealed and the date it was received by the borrower;
2. a full and specific statement as to why the final SBA loan review decision is alleged to be erroneous, together with all factual information and legal arguments supporting the allegations; and
3. the name, address, telephone number, email address, and signature of the appellant or its attorney.

Failure to include any of this information may result in dismissal of the appeal. All factual information that a borrower desires to be considered must be submitted with the appeal petition.

The OHA judge’s decision is not precedential. Final decisions may only be appealed to an appropriate federal district court. A prevailing borrower is not entitled to recover attorney fees.

The rules surrounding PPP loan decision appeals are complex and specific. If you have concerns about the rules, please contact the author of this article. This article is reprinted with permission from Warner Norcross + Judd, LLP. It is not intended as legal advice.