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What to do if your business is denied a PPP loan

Many small businesses have applied for a PPP loan during the pandemic. But a surprising amount have been denied. This article will help you figure out what you can do if you're denied, as well as give some background on PPP loans in general.

What are PPP loans?

The Paycheck Protection Program was originally rolled out in the summer of 2020. PPP loans were intended to help small businesses continue to pay their workers throughout the disruption of the COVID pandemic. The program was reopened in early 2021, and approved loans totaled $799 billion across both iterations.

PPP loans were different from other available business loans due to their repayment clauses. Money borrowed under the program could be partly or even completely forgiven if businesses met certain circumstances. Any business that applied for PPP loans could subsequently apply for PPP loan forgiveness.

Who has received PPP loan forgiveness?

Of the $799 billion in approved loans, just under half ($395 billion) has currently been forgiven. 6.76 million loan recipients have applied for loan forgiveness, and the vast majority (96%) of these applications have been accepted. However, due to the large sums requested for repayment, that still means that around $20 billion of loans are currently being denied loan forgiveness.

Why you could be denied PPP loan forgiveness

There are various reasons why part of all of your PPP loan is not forgiven, the most common ones being:

  1. You and/or your business is not eligible for a PPP loan

  2. There was a mistake in your loan calculations

  3. You and/or your business did not use the money for eligible purposes

  4. Your loan documentation was incomplete or improperly completed

What to do if you are denied PPP loan forgiveness

If your application for PPP loan forgiveness is denied, it’s not the end of the road. You have 30 days from the day you hear about your claim to appeal the decision.

To appeal, you will need to provide arguments that support your case, and documentation to back them up. These documents might include:

  • Payroll tax filings reported to the IRS

  • Quarterly employee wage reportings

  • Unemployment tax filings

  • Federal tax returns to show self-employment and/or partner income

NOTE: Some of these documents will require signatures from at least one of the filers to be accepted as evidence. Documents submitted without proper signatures may result in a denial of the appeal.

Assemble the relevant documentation, along with the SBA decision letter and the date it was received, and your information (name, address, contact details, signature) to the SBA Office of Hearings and Appeals:

Small Business Administration

Office of Hearings and Appeals

409 Third Street SW

Washington DC 20416

What happens if I don’t appeal?

If, for whatever reason, you are unable to submit your appeal in the 30 day window you will owe the amount of the loan that was not forgiven. Repayment is deferred until the SBA Office of Hearing and Appeals makes a final decision on the schedule and amount of repayment.

How long does an appeal take?

The judge assigned to your case will respond to your appeal within 45 days. Once you have received the judge’s decision, you have 10 days to respond if you disagree. The judge’s decision becomes final 30 days after you receive it, unless you respond within 10 days.

Can I appeal the judge’s decision?

Yes, as long as you act within 10 days of receiving the decision. There are two ways you can appeal the Office of Hearings and Appeals judge’s decision:

  1. File a request for reconsideration with the SBA Office of Hearings and Appeals

  2. Appeal the decision to the Federal District Court

If you choose the latter, notify the SBA Associate General Counsel for Litigation at the following address:

Small Business Administration

Associate General Counsel for Litigation

409 Third St. SW

Washington DC 20416

Tom (he/him) is a growth marketing manager at Snagajob helping small businesses find hourly workers.