SBA Issues New Guidance for PPP Lender Decisions Partially Denying Forgiveness

On January 27, 2022, the United States Small Business Administration (“SBA”) published new guidance regarding lender decisions partially denying forgiveness applications and created a process by which the borrower can request that the SBA review the lender’s decision. 

The Old Rule

This is a significant development because, before this new guidance, a borrower could only request an SBA review of a decision denying loan forgiveness in full.  As a result, borrowers who received lender decisions partially denying forgiveness had no administrative remedies available to contest these decisions because lender decisions are not appealing to the SBA’s Office of Hearing and Appeals (“OHA”). 

The New Rule

The SBA has changed course and is now permitting borrowers to request SBA review of a lender decision partially denying forgiveness in a similar fashion as the process for requesting SBA review of a lender decision denying forgiveness in full. Now, a borrower has the same opportunity to potentially turn a non-appealable lender forgiveness decision into an appealable SBA decision if the SBA agrees to review the lender’s decision. To preserve this possibility, the borrower must request SBA review through its lender within thirty days of receiving the lender’s notice that the lender received a partial loan forgiveness payment from the SBA. If the borrower misses this deadline, they will be precluded from requesting an SBA review of the lender’s decision. It is also essential to understand that the SBA decides, in its sole discretion, whether to review a lender’s decision. 

Borrowers can request an SBA review of lender decisions issued under the old rules.

Importantly, this SBA notice has the effect of resurrecting old forgiveness applications denied in part by lenders. This notice requires lenders to notify, by February 26, 2022, borrowers for which lenders had previously issued forgiveness decisions denying applications in part that they have 30 calendar days from receipt of the notice to request SBA review of those decisions. These borrowers will now have a shot at a remedy that did not exist when they received decisions on their forgiveness applications. 

Borrowers must make payments after requesting SBA Review. 

Although this is all good news for borrowers, it should be noted that requesting an SBA review of a lender decision does not stay the obligation of the borrower to continue to make regular payments on the amount of the loan currently not forgiven. This differs from filing an appeal petition with the SBA OHA, which does stay payments while the appeal is pending.

What can you do?

Suppose you believe your lender wrongfully partially denied your forgiveness application. In that case, you need to act quickly to request an SBA review and preserve the possibility of getting an appealable final SBA decision. If you fail to timely request SBA review, then you will lose the opportunity to contest the lender’s decision through the SBA appeals process.  

Contact Us

If you have questions or concerns regarding requesting SBA loan review or other problems with PPP loan forgiveness, please contact Matthew M. Zapala, Esq., by e-mail ( or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist you.

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Your PPP Lender Refused to Fund Your SBA-Approved PPP Loan – Now What?

Challenges with the Paycheck Protection Program

It does not take much effort online to see there is a massive, lingering problem with the Paycheck Protection Program – PPP lenders across the country refused to fund thousands of borrowers’ PPP loans even though the loans were SBA approved and the borrowers had signed and submitted all required PPP loan documents.

It seems the group of PPP borrowers most impacted by unfunded loans were sole proprietors and the smallest of small businesses seeking loans smaller than $50,000.

In early 2021, the loan processing fees for small PPP loans were increased substantially such that lenders could receive $2,500 flat fees for each loan compared with their having only received a few hundred dollars for previous similar loans. The result was a predictable disaster – PPP lenders and loan servicers were overwhelmed by PPP loan applications. In the chaos of the last few months of the Program, it appears likely that lenders violated many PPP rules and breached their contracts with PPP borrowers.

Lenders most commonly:

  1. Failed to timely process PPP loan applications;
  2. Prevented PPP loan applicants from applying with other PPP lenders;
  3. Was unable to communicate and work with borrowers to resolve issues;
  4. Refused to fund SBA approved PPP loans;
  5. Requested the same or additional documents from borrowers long after they had already signed their loan documents;
  6. “Denied” PPP loans after approving them, and after borrowers had already signed and submitted their PPP loan documents, including their promissory notes; and
  7. Reported unfunded loans as fully disbursed, resulting in payment of the loan processing fees.

In many instances, it appears the lenders looked for or even created excuses or reasons to get out of funding PPP loans because the lenders did not have the means to timely process and fund the loans.

Nolan Heller Kauffman files class-action cases

While it is undeniable that PPP loan demand was high in 2021, that does not excuse PPP lenders’ conduct or relieve lenders of their contractual obligations to their PPP borrowers. It was solely the responsibility of PPP lenders to process and fund PPP loans within the time frames set by the PPP and SBA rules.

We have filed two class-action cases on behalf of putative classes of individuals and small businesses whose loans were never funded despite SBA records showing that they were. If you find yourself in a similar situation, you can contact us at the number below.

What can you do?

If you believe your PPP lender did not properly process your PPP loan or loan application for any of the above reasons, you may have a right to sue your PPP lender for the damage caused to you and your business as a result. This is particularly true if you timely applied for a PPP loan, it was SBA approved, you signed the loan documents, and you never received your PPP loan funds for one reason or another.

Contact Us

If you have questions or concerns regarding an unfunded Paycheck Protection Program loan or how to navigate a dispute with your PPP lender regarding your PPP loan, please get in touch with Matthew M. Zapala, Esq., by e-mail ( or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist you.

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