PPP Deferment Extended for Borrowers Who Appeal Forgiveness Decisions
The Small Business Administration (SBA) recently issued an interim final rule that extends the deferment period for Paycheck Protection Program (PPP) borrowers who appeal final SBA loan review decisions.
Prior to the issuance of this interim final rule, the rule for appeals of final SBA loan review decisions on PPP loans provided that appeals by PPP borrowers of any final SBA loan review decision do not extend the deferment period of the PPP loans. Under the original rule, PPP borrowers must begin making payments of principal and interest on the remaining balance of their PPP loans when the SBA remits the loan forgiveness amount to the PPP lender (or notifies the lender that no loan forgiveness is allowed).
Under the new interim final rule, however, a PPP borrower’s timely appeal of a final SBA loan review decision will extend the deferment period for the PPP loan until the SBA’s Office of Hearings and Appeals (OHA) issues a final decision on the appeal.
The revised SBA OHA rule “will provide that the borrower should notify the lender of the appeal so that the lender can extend the deferment period.” Under the revised SBA OHA rule, an appeal petition “must be filed with OHA within 30 calendar days after the appellant’s receipt of the final SBA loan review decision.”
According to the SBA, “to avoid the potential administrative burden of having to reverse implementation of the final SBA loan review decision, including the refund of borrower payments by the lender and the processing of forgiveness payments by SBA, a timely appeal by a PPP borrower of a final SBA loan review decision should extend the deferment period of the PPP loan.” The SBA “believes that allowing for continued deferment is in the best interest of the borrower.” Indeed, the SBA, servicing lenders, and any borrowers vindicated by a successful appeal will all benefit from the reduced back-end administrative burden that this deferment rule is targeting. Accordingly, the SBA is “conforming the applicable PPP rules to provide that a timely appeal by a PPP borrower of a final SBA loan review decision extends the deferment period of the PPP loan until OHA’s decision becomes final under 13 CFR 134.1211.”