Hot Topic Tuesday – SBA Issues Interim Final Rule on Loan Review

August 18, 2020

By: Caity Roach (née Witucki)
Contributing Editor, Hot Topic Tuesday

Hot Topic Tuesday – SBA Issues Interim Final Rule on Loan Review

On August 11, 2020, the SBA released a new interim final rule (IFR). This IFR establishes a new subpart L for 13 CFR part 134, establishing rules of practice for appeals of certain SBA loan review decisions under the Paycheck Protection Program (PPP).

Here is a summary of the new subpart:

  • The IFR defines the term “SBA loan review decision” as an official written decision by SBA after SBA completes a review of a PPP loan.

  •  SBA may undertake a loan review at any time at its discretion.

  • Only final SBA loan review decisions can be appealed to the Office of Hearings and Appeals (OHA); a PPP borrower cannot file an OHA appeal of any decision made by a lender concerning a PPP loan.

  • Size determinations and NAICS code designations are not appealable SBA loan review decisions.

  •  An appeal by a PPP borrower of any SBA loan review decision does not extend the deferral period of the PPP loan.

  • If SBA remits to the lender the PPP loan forgiveness amount set forth in the decision issued by the lender to SBA, the borrower may not file an appeal with OHA, and the borrower must begin repayment of any remaining balance of its PPP loan.

  • An appeal petition must include the following information: The basis for OHA’s jurisdiction, a copy of the SBA loan review decision, a full and specific statement as to why the SBA loan review decision is alleged to be erroneous, the relief being sought, signed copies of payroll tax filings, signed copies of applicable federal tax returns, and contact information for the appellant or its attorney.

  • Only the borrower on a loan for which SBA has issued a final SBA loan review decision has standing to appeal the SBA loan review decision to OHA. Individual owners of a borrower and lenders do not have standing to appeal an SBA loan review decision.

In addition to the IFR, the SBA also released an updated FAQ sheet that addresses SBA’s guarantee on PPP loans, eligible payroll costs, and loan forgiveness.