SBA PPP Loan Forgiveness Denial Appeals

The team at Milikowsky Tax Law has successfully appealed numerous Paycheck Protection Program Loan Forgiveness denials and we are ready to help you bring your case to the SBA for consideration.

What to do if you receive a letter of denial from the Small Business Administration (SBA)

If you received a letter from the SBA denying your forgiveness request for your PPP loan within the last 30 days, the clock is ticking.  You have 30 days to respond and file your appeal.  The timeline for SBA forgiveness appeals is inflexible. Once your initial 30-day period expires you will lose your right to appeal SBA’s denial to forgive your PPP loan.

We strongly recommend you hire an attorney to represent your company in the SBA appeal process. The ONLY individuals who can represent your company in the appeal process are: An owner, a company officer, or an attorney. CPAs are not authorized to represent borrowers in the appeal process.

Steps you must take to appeal your SBA Loan Forgiveness Denial

(this is not a complete list but a summary)
  1. Review “Final SBA Loan Review Decision Letter”
  2. Confirm your deadline to appeal the SBA decision
  3. Gather your documents & facts to identify issues to raise in your appeal
  4. Review SBA’s prior legal decisions & rulings
  5. Draft your Appeal (max 20 pages) and include exhibits (your evidence) and SBA’s Final Loan Review Decision Letter.
    *You must include your legal arguments, facts, and legal authority to support your position to show SBA’s denial was “clearly erroneous” (there are additional requirements – see SBA’s website).
  6. Create an online account at
  7. Answer all questions truthfully and completely when responding to SBA’s online questionnaire.
  8. Identify a legal representative for your business to handle the SBA Appeal.
  9. Upload your appeal, exhibits, and SBA Final Decision Letter.

Get Help With Your PPP Loan Forgiveness Appeal Now

Complete the form, and a member of our staff will contact you shortly. We strongly recommend retaining an attorney to represent your company and prepare and file your formal appeal.

SBA PPP Loan FAQs & Tips

Compliance, deductions, forgiveness, employees, the CARES Act has offered support and raised many questions. The experienced team at Milikowsky Tax Law is here to sort through all of the information and give you facts and strategies for your business as you resolve your SBA loan forgiveness.

Currently, IRS published Notice 2020-32 that prohibits deducting expenses if paid with a forgiven PPP loan.

Yes. However, the exclusion only applies to cash compensation and does not apply to all employee benefits such as contributions to a defined benefit retirement plan, group health care coverage, and payment of state/local taxes assessed on compensation.

No. The independent contractor or sole proprietor is itself potentially eligible for a PPP loan if it satisfies the requirements.

A borrower may rely on the laws, rules and guidance available when it submitted its application through the time its application was accepted.

Yes, employees need to have their “principal place of residence” in the United States.

For purposes of loan eligibility, borrowers must calculate the total number of employees including part-time employees. For purposes of “loan forgiveness,” employers must use “full-time equivalent” employees to determine the extend the forgiveness amount will be reduced for workforce reductions.

Yes. SBA, in consulting with the Department of the Treasury, will review all loans greater than $2 million (as well as other loans) after a borrower submits a loan forgiveness application to ensure PPP loans were provided to eligible borrowers.

Yes. However, a safe harbor provision applies to SBA’s review of PPP loans. Borrowers with an original principal amount less than $2M are deemed to have made the required certification regarding the necessity of the loan request in good faith. Borrowers with loans greater than $2M must be able to substantiate their certification in good-faith. If SBA determines a borrower lacked adequate basis for the required certification, SBA will seek repayment. SBA indicates it may not pursue administrative enforcement or referrals to other agencies (i.e. IRS) if the loan is repaid. However, there is no guidance at this time regarding the amount of time to repay the loan once SBA determines a borrower was not eligible for the loan.

No. The PPP loan must be filed by the partnership or LLC. Only individuals who are self-employed or sole proprietors who filed a Form 1040 Schedule C for 2019 are eligible to file a PPP loan application if they were in operation on February 15, 2020 and their principal place of residence was in the U.S.

Owner compensation replacement (calculate based on 2019 net profit); employee payroll costs for employees whose principal place of residence is in the U.S.); mortgage interest payments (not mortgage repayments or principal payments) on any business loan on real or personal property (i.e. warehouse or vehicle used to conduct business); business rent payments; business utility payments. For these expenses to be “permissible,” you must be entitled to claim these expenses on your Form 1040 Schedule C. Additionally, interest payments on any other business debt incurred before February 15, 2020 can be paid with PPP loan funds but these amounts are not eligible for PPP loan forgiveness.

Yes, for self-employed individuals who file a form 1040 Schedule C, allowable uses for the funds are the type of expenses incurred and paid in 2019. The purpose for the PPP loan is to “maintain existing operations and payroll.” It is not for business expansion. Additionally, at least 75 percent of the PPP loan proceeds shall be used for payroll costs. Other restrictions and conditions may apply.

Yes, you have 8 weeks to use the loan funds starting with the date of the first disbursement of the SBA PPP loan.

Yes, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.

Payroll costs including salary/wages and tips up to $100k of annualized pay per employee (max $15,385 per individual for the 8 week period) including covered benefits for employees (not owners) and including health care expenses, retirement contributions, and state tax imposed on employee payroll paid by the employer (i.e. unemployment insurance premiums). Additionally, payments for owners compensation (calculated based on 2019 net profit, limited to 8 weeks worth (8/52) of 2019 net profit) excluding qualified sick leave equivalent amount where a credit is claimed under section 7002 of the Families First Coronavirus Response Act or qualified family leave equivalent amount where a credit is claimed under section 7004 of FFCRA. Lastly, the following payments are eligible for forgiveness to the extent they are deductible on Form 1040 Schedule C: i) interest on mortgage obligations on real or personal property (incurred before February 15, 2020); ii) rent business rent payments (leases in force before February 15, 2020); iii) and business utility payments (under service agreements before February 15, 2020).