If you’ve found yourself facing the denial of your PPP-1 or PPP-2 loan, the appeals process might appear daunting. In this comprehensive guide, we’re here to shed light on frequently asked questions that often arise when businesses need to file a PPP-2 appeal. Our aim is to provide you with insights that can serve as valuable guidance during this challenging period.
1. Impact on PPP-1 Forgiveness:
A common question revolves around the potential impact of a denied PPP-2 loan on an already forgiven PPP-1 loan. This concern arises from the fact that some loans receive automatic approval through a computer program. If, after your PPP-1 loan forgiveness has been granted, a discrepancy is uncovered in your PPP-2 loan application, the Small Business Administration (SBA) has the authority to retract the forgiveness for your PPP-1 loan and seek to recover the disbursed funds. This could leave you facing an unexpected balance that requires settlement. Therefore, addressing the issues causing the denial of your PPP-2 loan forgiveness becomes paramount.
2. Timely Appeal Filing:
When it comes to filing an appeal for a denied PPP-2 loan, timing is of the essence. You’re given a narrow window of just 30 days from the moment you receive the final loan review decision letter (FLRD) from the SBA. It’s important to note that if the date on the letter is later than the actual receipt date, you can verify this with an email confirmation from your bank. Remember, the date that matters is the day you received the email, not when you opened it. Counting 30 days from that precise point ensures that your appeal is submitted within the designated time frame.
3. Professional Assistance:
Initiating a PPP-2 appeal involves maneuvering through intricate procedures and adhering to strict timelines. Seeking professional assistance, particularly from legal experts well-versed in the nuances of PPP-2 appeals, can prove to be immensely advantageous. With their adept guidance, you can ensure that your appeal is accurately filed and submitted within the required time window, substantially mitigating the potential risks of setbacks or complications.
4. Additional Resources:
Beyond the insights shared here, we offer an array of question-and-answer videos that specifically address SBA PPP forgiveness denials. These supplementary resources serve to provide even more in-depth understanding of the appeals process, equipping you with the knowledge needed to comprehend the steps involved. If you find yourself in need of further clarification or assistance, we strongly encourage you to reach out to us for guidance.
Applying for PPP Loan Forgiveness: A Step-by-Step Guide
As businesses move forward in 2023, loan forgiveness remains a critical aspect of PPP loans. To have your PPP loan forgiven, there are several requirements set by the SBA that you must meet. Full loan forgiveness can be obtained if you maintain employee and compensation levels, use the loan proceeds for eligible expenses (including payroll costs, protective equipment, supplier costs, employer-provided group insurance payments, property damage, and operational expenses), and spend at least 60% of the proceeds on payroll costs.
Step 1: Use the Portal (If You’re Eligible)
The SBA provides a dedicated page for PPP loan forgiveness, along with the application and instructions. If your PPP loan was $150,000 or less and you used one of the participating lenders, you can use the SBA’s Direct Forgiveness Portal to submit your forgiveness application directly. For borrowers without a participating lender, they will need to apply through their lender, who will provide them with the appropriate form.
Step 2: Get Your Paperwork Together
To support your forgiveness application, be prepared to provide documentation for both payroll and non-payroll expenses during the covered period. Payroll documentation may include bank account statements, third-party payroll service provider reports, tax forms (e.g., Form 941), and receipts documenting employer contributions to health insurance and retirement plans. Non-payroll expenses may require documentation for business mortgage interest payments, rent or lease payments, utility payments, operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
Step 3: Submit the Form
Once you have gathered all the necessary documentation, submit your forgiveness application. Eligible borrowers can use the Direct Forgiveness Portal to submit the application directly to the SBA. If not eligible for the portal, borrowers should submit the application and documentation to their lender.
Step 4: Await the Decision (and Appeal, If Necessary)
After submitting your application, the SBA or your lender will notify you of their decision within 60 days. If they approve loan forgiveness, it could be for the full amount or a partial amount. In case of partial forgiveness, borrowers will be responsible for repaying the remaining amount with 1% interest over the loan term. If the SBA denies your loan forgiveness, you may be able to appeal the decision through the SBA’s Office of Hearings and Appeals (OHA) within 30 days of the decision.
Effectively navigating the PPP-2 appeal process demands meticulous attention to detail, unwavering adherence to designated timelines, and a comprehensive grasp of the intricacies at play. Should you encounter a denial for either PPP-1 or PPP-2 loan forgiveness, taking swift action to address any discrepancies is imperative to forestall any potential ramifications on previously forgiven loans. Always bear in mind the critical importance of filing your appeal within the stipulated 30-day period. And when in doubt, consider seeking the guidance of seasoned professionals to navigate this process with confidence.
At Milikowsky Tax Law:
Our commitment at Milikowsky Tax Law is to provide businesses like yours with the expert guidance necessary to navigate the complexities of PPP-2 appeals. Should you have further inquiries or require hands-on assistance, please don’t hesitate to connect with us. Our team is here to support you through every step of the appeals journey.