$800 billion PPP in its final stage: what to do if your small business is denied forgiveness

STATEN ISLAND, NY – At the height of the coronavirus (COVID-19) pandemic, the United States Small Business Administration (SBA) administered an $800 billion Paycheck Protection Program (PPP) aimed at help businesses keep their workforce employed. The forgivable loan initiative, in which private funds were guaranteed by the federal government through the SBA with little or no repayment required, saved many small businesses from complete economic ruin. But now that the program has expired, questions remain over what funding, if any, must now be repaid.

“A total of 11.4 million first and second draw PPP loans have been secured for $789,776,462,485 between 2020 and the program’s close at the end of May 2021,” noted SBA spokesman Matt Coleman. “9,679,431 or 85% of all PPP loans have been canceled in whole or in part for a total of $695,581,269,282 as of February 20, 2022.”

One of the SBA’s most widely used COVID relief programs due to its forgiving guidelines, the PPP is currently in its forgiveness phase, in which cases are individually reviewed to verify that compensation levels have been maintained (up to ‘at $100,000 per employee) and at least 60% of the loan proceeds were used for payroll costs and other qualifying expenses. According to the figures quoted above, a good percentage of these loans have already been forgiven.

But the Philadelphia Inquirer reported that nearly 350,000 small business loans in 2020 have still not been canceled – most of them under $25,000. Much of this lingering debt – around $28 billion – has been discounted due to unfortunate misclassifications or sudden rule changes, depending on the mediacreating a burden for many of the country’s smaller businesses.

So what can you do if your request for forgiveness is denied?

Here is an overview of the process and some tips for appealing:

How are forgiveness decisions made?

“In general, forgiveness decisions are first made by the lenders participating in the program. However, in 2021 the SBA and the Biden-Harris administration unveiled a direct forgiveness option for borrowers with PPP loans below $150,000,” Coleman said. “In order to use this option, lenders had to register to participate in this program. If a borrower’s lender does not participate, they cannot use this option. Approximately 1,430 lenders participate in the program and are listed here. Lenders who do not participate in direct forgiveness will run its forgiveness program as originally offered by the Agency – borrowers apply to lenders for forgiveness and, upon review, render a decision to the SBA for review, at which point a decision final loan review is taken.”

Can you appeal the decision in case of refusal?

“All PPP Borrowers may appeal the SBA’s PPP loan final review decision to the impartial SBA Hearings and Appeals Office in accordance with the rules and timelines set for the program and the rules issued for this process,” Coleman said.

Is there a way to get help revising your form?

“SBA Resource Partners provide free one-on-one assistance to small businesses and entrepreneurs and can work one-on-one with any candidate to review their PPP Forgiveness materials, documents, and applications,” Coleman notes. “You can find the SBA resource partner closest to you by visiting www.sba.gov/local-assistance.”

In Staten Island, two sites offer help: the New York State Small Business Development Center, located on the College of Staten Island campus in Willowbrook, or the Staten Island Chapter of SCORE, located at 1855 Victory Blvd.

Do I have to declare my PPP loan on my taxes?

“For matters such as taxation/tax filings, the SBA refers you to our government colleagues at the Internal Revenue Service who can provide more information on federal tax filings, as well as to the New York State Department of Taxation and Finance to discuss state taxation also returns,” Coleman concluded.