What to Do if My PPP Loan is Not Forgiven?

small businesses who were denied the PPP loan forgiveness can still appeal for forgiveness.

Business owners who applied for SBA PPP loan forgiveness, but were denied have a limited time frame in which to appeal the forgiveness denial. Read on to learn about the process of appeal, what steps you must take, and the strict timeframe in which you must file to appeal a Paycheck Protection Program loan forgiveness denial from the Small Business Administration. *

*The information provided is general in nature and not intended to give legal advice or to create any type of attorney-client privilege

Watch the video below to hear John Milikowsy review how to appeal an SBA PPP forgiveness denial. 




If you received a notice of denial of your PPP loan forgiveness, the first step is to confirm who denied your application. The denial can come from:

  • Your lender (Bank, Credit Union or Fintech)
  • The Small Business Administration (SBA)

If your lender denied your application, you may not have appeal rights and you will have to consult with the lender themselves to find out the reasons why the forgiveness was denied and what options you have going forward. 

If the SBA denied your application, you will have received an SBA Final Decision Letter in the mail. The letter will have a date printed on it. If you wish to appeal your forgiveness denial, you must reply to SBA and submit your appeal within 30 days of the date listed on your final decision letter. Failure to reply and submit an appeal by or before the 30-day limit means you may forfeit your appeal rights, and you will have to repay the full amount of the PPP loan.


SBA Final Decision Denial Letter 

The first page of the Final Decision letter contains a section indented in bold that provides the reasons that SBA denied your forgiveness application. Before taking action, it’s important to understand why SBA is rejecting the forgiveness application.  


Find Evidence Through Resources 

Your obligation, and duty when filing an appeal is to show that SBA was clearly in error in denying your forgiveness application. In order to show that SBA made an error in denying your application, it’s crucial to research, provide legal arguments, and evidence to counter their claim. Evidence is critical to support your case.

SBA uses the Office of Hearing and Appeals (OHA) as a resource to hear cases from borrowers seeking appeals for unforgiven loans. Review their website to view their published prior opinions, one of them may relate to your case. 

The best recommendation is to hire a qualified attorney to make sure that you’re putting the most successful appeal together. Losing your appeal will necessitate filing with the federal district court, a costly and time-consuming process. There are myriad rules and regulations involved in federal cases.  Because SBA is a federal agency, any appeal denied in the Office of Hearings and Appeals will have to go to a higher court. 

The CARES act provided the general authority for SBA to issue PPP loans. This act also provides the limitations and the qualifications for which companies qualify for the loan, and for loan forgiveness. Your attorney will know the CARES Act and all of its intricacies.  IF you choose to represent yourself in your appeal, be sure to review the guidelines and details of loan forgiveness on their website. 

The Code of Federal Regulations (CFR) is another SBA published body of law. These regulations help clarify what companies were eligible or ineligible for the PPP loan and for loan forgiveness. For additional clarity, the CFR provides SBAs operating procedures.

By researching the laws and guidelines set forth by SBA, the CARES Act, the CFR guidelines, and gathering all of the documentation around your original application and denial, you can create a strong, coherent case for SBA to overturn their denial of forgiveness.  


Creating the Appeal

The criteria for an appeal filed with the SBA are strict.  The appeal must be 20 pages or less. In order to meet this limit, you must have your facts clearly stated so they can be easily understood. There is no room for excessive rambling or lengthy explanations. 

The appeal itself must provide legal authority and evidence to support your arguments, as well as include the SBA’s final decision letter. Without submitting the < 20-page appeal document and the original final decision letter, your case can be summarily dismissed, which waives your right to appeal. 

Since the SBA PPP loan is a business loan, not a personal loan, an identified legal representative of the business must represent the appeal (or a qualified attorney). Only one of three people can legally represent the business:

  • Shareholder owner 
  • An officer 
  • An attorney 

Who is not legally entitled or allowed to represent businesses in the SBA appeal process? 

  • Certified Public Accountants (CPAs)
  • Lenders 
  • General  Employees

Step one is to submit the appeal through the SBA online portal at appeals.sba.gov. The appeal form will ask you to create an account so you can log in and upload the appeal. Once your account is created, there will be other questions in the portal for you to answer to complete the process. Finally, upload the following documents into your account: 

  • SBA appeal
  • Decision letter
  • All evidence collected 

This information must be collected and submitted before the 30-day window closes. 


Post Appeal Submission

After your appeal is submitted, we recommend sending a copy of your appeal to your lender. They may defer your loan repayment for the loan amount until the SBA makes its final ruling. The time it takes for SBA to reach a decision varies. Best practice is to log into your portal account several times a week to check for messages or notices that indicate the status of your appeal.  At times, there may be requirements that you have to respond to. 

Throughout this process, it’s essential to respond in a timely manner. Missing deadlines is a mistake that can lead to a denied appeal– and thereby having to repay the loan amount in full. 

If your appeal was denied, you can request a reconsideration of the decision. If the reconsideration is denied, then the next step is to file a case in the federal district court. At this point, the cost and inconvenience of the process increase many times over. Because of this, be sure you take the proper time to file your initial appeal.  We recommend hiring an attorney who has experience with government agencies, is highly qualified, and understands your business.


Client Case study

One of our recent clients is a business owner whose PPP loan was denied forgiveness.  He came to us to see if we could help with his appeal to the SBA.  He and many other business owners in his industry applied for and were granted PPP loans at the start of the COVID-19 pandemic.  When it came time to apply for forgiveness, he had his bookkeeper submit all of the documentation to show that they had used the funds correctly to cover 75% payroll costs and 25% operating expenses.  Over the course of the next months, his fellow business owners received their forgiveness decisions and were all granted forgiveness by the PPP.  Except him.  Our client received a final decision letter of denial from the SBA. 

In this case, The bank recommended forgiveness but the SBA denied the forgiveness because his bookkeeper accidentally put the wrong NICS code. When he got the denial the business owner did not get on the phone himself with SBA but put his bookkeeper on the line with the agency to explain what his company does. The bookkeeper’s description of the business led them to believe he was in a prohibited industry… and they denied the forgiveness.

At the SBA the overwhelming number of cases has caused an influx of new hires, many of whom are learning the codes and structures of SBA loan forgiveness on the job.  This means there is less nuance in a rejection than a business owner might think.  Often, the SBA employees are simply matching NICS codes with industries, checking them against prohibited business lists, and issuing rejections. 

Our team researched the causes for the loan forgiveness denial, wrote the under 20 page appeal letter, gathered all supporting evidence, and argued on his behalf successfully to the SBA OHA.  

While each case is unique and this is not an indication of success in other cases nor a promise of results, our team has extensive experience in government audits and cases involving government entities from IRS to SBA and CSLB.  

For more information on SBA PPP loans, read our article here. 


PPP loans that are not forgiven have a 30 day window where you can appeal for forgiveness