WASHINGTON—The Small Business Administration (SBA) has issued an interim final rule (IFR) detailing the process for Paycheck Protection Program (PPP) borrowers to appeal loan forgiveness application decisions.
In addition, the agency released more FAQs related to fees, group healthcare benefits, and the impact of economic injury disaster loans (EIDLs) on PPP forgiveness.
The PPP's authorization expired Aug. 8; the SBA's latest data show almost $134 billion in funding remained. Congress is currently considering ways to continue and improve the program, including by allowing certain borrowers to take out a second PPP loan and simplifying the forgiveness process, which could be included in a Phase 4 coronavirus relief package, NAFCU noted.
The Criteria
The IFR informs PPP borrowers and lenders of the process for a PPP borrower to appeal certain SBA loan review decisions under the PPP to the SBA Office of Hearings and Appeals (OHA). Decisions eligible for the appeals process must be an official written decision by SBA, after SBA completes a review of a PPP loan, that finds a borrower:
- Was ineligible for a PPP loan
- 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
In addition, the appeals process does not extend the payment deferral period for the borrower. Full details of the process can be found in the IFR.
Three Questions
NAFCU noted the SBA added three questions related to EIDLs to its FAQs on PPP loan forgiveness, including:
- How lenders will know the amount of an EIDL advance that the SBA will automatically deduct from borrowers' PPP loan forgiveness amount
- How lenders should handle any remaining balance due on a PPP loan after the SBA remits the forgiveness amount to the lender
- What lenders should do if a borrower received an EIDL advance in excess of its PPP loan amount
In its general PPP FAQs, two new questions address the effect the payment or nonpayment of fees of an agent or other third party have on SBA's guarantee of a PPP loan or SBA's payment of fees to lenders, and what benefits fall under group health care benefits.