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Was Your PPP Loan Only Partially Forgiven? You Can Now Seek a Review

  • Small Business Administration creates a new review process for borrowers whose lenders either submitted a partial approval for their Paycheck Protection Program loan or required them to apply for forgiveness of a sum less than what was borrowed
  • Lenders must notify qualifying borrowers by Feb. 26, and they will then have 30 calendar days to seek a review
  • Eighty-three percent of PPP loans have been fully or partially forgiven

Summary by Dirk Langeveld

Certain business owners who received only partial forgiveness on their Paycheck Protection Program loans can apply for reconsideration under a new process created by the Small Business Administration.

The SBA said it created the process in response to borrowers saying that their lender either submitted a partial approval decision based on their forgiveness application or required the borrower to apply for forgiveness of a sum less than what was borrowed. These borrowers can now ask the SBA to review their loan if either circumstance occurred, though the review is not available to borrowers who opted not to seek full forgiveness of their own volition.

The SBA says that by Feb. 26, lenders must notify borrowers who received a partial forgiveness decision on their PPP loan that they have 30 calendar days to seek a review. This request must be made through the lender, who within five days must provide the SBA with this request as well as a copy of the lender’s previous notice to the borrower about the reasons for the partial loan forgiveness.

The SBA will consider factors such as borrower eligibility, PPP loan amounts, the use of proceeds, and loan forgiveness amounts. During this review, the borrower must continue to make payments on the loan.

If the SBA determines that the borrower is entitled to full forgiveness, the lender must refund all payments that the borrower has made. If the review determines that the borrower does not qualify for full forgiveness but can be forgiven in an amount greater than the lender’s partial approval decision, the SBA will remit an additional forgiveness payment to the lender so they can make up the difference and re-amortize the loan.

The SBA cautions that borrowers seeking review of a partial forgiveness decision could potentially find that the borrower is eligible for forgiveness in a lower amount than what was approved by the lender. In this circumstance, the lender must remit the excess funds to the SBA and re-amortize the loan.

Under the SBA guidelines, full forgiveness is available to borrowers who, during the eight to 24-week covered period after receiving their loan, met the terms of maintaining employee and compensation levels. Borrowers must also have spent their funds on payroll and other eligible costs, with at least 60 percent going to payroll. Borrowers are also required to apply for forgiveness within 10 months of their covered period, and to provide documentation showing how PPP funds were spent.

According to the latest SBA report from Feb. 6, there have been a total of 9.65 million forgiveness applications out of 11.43 million PPP loans. The total forgiveness amount requested so far is $696.48 billion, or 88 percent of the $790 billion in total disbursed.

Eighty-three percent of PPP loans have been completely or partially forgiven, with $687.83 billion remitted. This includes 95 percent of loans extended in 2020 and 74 percent of loans extended in 2021.

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