PPP Loan Repayment Request
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- The Paycheck Protection Program (“PPP”) is an SBA-guaranteed loan that was designed to provide immediate financial assistance to companies suffering economically from the uncertainty created by COVID-19.
- If certain specified requirements are met, the PPP loan can be fully forgiven. For instance, if the company uses their PPP loan funds for qualified expenses during the eight-week covered period, the loan may be forgiven in its entirety.
- The funds from the PPP loan must be used for payroll, rent, mortgage interest, and utilities, and no less than 60% of all eligible costs for loan forgiveness must be used on payroll costs.
- Company-applicants are required to follow extensive documentation and retention policies as a part of their loan forgiveness applications.
- If the lender accepts the company’s application for loan forgiveness, the decision is forwarded to the SBA. If the lender denies the application, the decision is still forwarded to the SBA and the company is given a notice in writing as to the decision.
- In all situations, the SBA reserves the right to audit any PPP loan of any amount.
- Consider hiring a team of PPP loan defense attorneys who are experienced in guiding its clients through the process of loan forgiveness applications.
PPP Loan Defense Team
If you are concerned about the status of your PPP loan including your application for loan forgiveness, it is time to contact an experienced defense attorney today.
Federal agencies such as the SEC and DOJ are increasingly scrutinizing PPP loan applications and companies’ requests for loan forgiveness. The SBA has recently announced its intention to audit any PPP loan of any size.
This demonstrates how serious federal agencies are regarding the PPP loan process.
At Oberheiden, P.C., we understand that this process and risk of an impending audit or investigation are very stressful, especially since the PPP was supposed to put companies such as yours at ease.
Our team of defense attorneys is experienced in dealing with all aspects of the PPP, including the loan forgiveness application and your request for loan repayment.
We can develop a personalized defense strategy in response to federal charges, advise you on your repayment request, and, if necessary, litigate your case in court.
Introduction to the PPP’s Loan Forgiveness Policy
The Paycheck protection Program (“PPP”) is administered by the Small Business Administration (“SBA”) and provides loans to small and medium-sized businesses to maintain their payrolls, pay other qualified expenses, and continue operating in these times of economic uncertainty.
The best part of the PPP is that the SBA loans can be fully forgiven if certain criteria are met such as using the loan to cover qualified expenses during the eight-week covered period beginning when the loan is first disbursed.
Costs Eligible for Loan Forgiveness
The funds from the PPP can be used for the following purposes: payroll, rent, mortgage interest, and utilities.
Legislation at the beginning of June lowered the minimum percentage of PPP funds that must be used on payroll costs—starting in early June, no less than 60% of all eligible costs for loan forgiveness must be used on payroll costs during the covered period.
Many interpret this new rule as meaning that none of the loan would be forgiven if the company spends less than 60% of their loan proceeds on payroll.
“Payroll” costs here refer to gross salary, gross wages, tips, commissions, paid leave, and allowances for dismissal or separation paid during the covered period.
Reviewing the Loan Forgiveness Application
There are extensive documentation and retention policies mandated by the loan forgiveness application.
For instance, with the PPP Loan Forgiveness Application, the company-applicant must submit documentation supporting payroll and nonpayroll calculations, the amounts of payroll and nonpayroll costs, and other required certifications identified in the application.
These other certifications mandate that the company-applicant certify and attest that everything in its supporting documentation is correct in all material respects.
The SBA has made clear that providing accurate documentation and certification is the responsibility of the applicant-company.
While the lenders are allowed to rely on the company’s certifications in the loan forgiveness application, these lenders are nonetheless expected to perform a good-faith review of the company-applicant’s calculations and supporting documentation.
Lenders will generally perform such review because if the lender’s approval of the loan forgiveness application is deemed to be flawed to the SBA, then the lenders may be subject to legal responsibility and other penalties.
Decision by the Lenders
After the company-applicant submits their loan forgiveness application, the lender must issue a decision within 60 days.
The lender may approve the application in its entirety or in part. Conversely, the lender may deny the application for loan forgiveness but still give the company the chance for reconsideration.
However, if the SBA determines that the company is otherwise ineligible for loan forgiveness, the company cannot ask the lender for reconsideration of its loan forgiveness application. In such instances, the SBA may direct the lender to deny the loan forgiveness application or may seek repayment of the outstanding PPP loan balance.
Acceptance of the Loan Forgiveness Application
If the lender decides that the company is to be approved for the loan forgiveness application, the lender then issues this decision to the SBA. In its decision to the SBA, the lender will include the calculation form and PPP Schedule A of the Loan Forgiveness Application.
The SBA then has up to 90 days to provide the loan forgiveness amount to the lender plus interest accrued.
This process is also subject to an SBA review or audit, which the SBA recently reserved the right to conduct on any PPP loan of any size.
Rejection of the Loan Forgiveness Application
If the lender decides that the company is not to be approved for the loan forgiveness application, the lender must provide the SBA with the reasons for its denial. it must also provide the calculation form and PPP Schedule A of the Loan Forgiveness Application.
The lender also has the responsibility to notify the company-applicant in writing of this denial for loan forgiveness.
The SBA retains the right to review all lenders’ decisions and, further, companies may request that the SBA review such decisions within 30 days of the receipt of their denial notice from the lender.
Need Advice Regarding A PPP Loan Repayment Request?
The PPP is a very advantageous program not only because it provides immediate economic assistance to companies struggling to make ends meet in the midst of financial uncertainty but also because these SBA-guaranteed loans can be 100% forgivable.
However, the process of loan forgiveness and the loan forgiveness application are very complicated and constantly evolving. It is critical that all companies wishing to apply for loan forgiveness secure the advice of a PPP loan defense attorney.
The defense attorneys at Oberheiden, P.C. have experience and extensive knowledge regarding the PPP loan forgiveness application. Let us help you.
Call us at 888-680-1745 or contact our office for a free consultation.