Last year, when the SBA rolled out the paycheck protection program, questions arose about whether companies made their “need certifications” in good faith. A borrower’s need for certification was important because it could impact whether the SBA denied a PPP loan or ultimately forgiveness of a loan. Recent data on the SBA website showed it had approved over 11 million PPP loans, forgiven over three million and thousands more were under review.
A Baker Donelson memo summarizes procedures relating to the PPP need certification and notes that the SBA never stated that it would only analyze the need certification during the loan review. Should the SBA deny forgiveness of a PPP loan, John blogged earlier this year about the short window to file an appeal. Baker Donelson’s memo says PPP borrowers should prepare a record for any potential appeal during the SBA’s review process. Here’s an excerpt with more about reasons some companies should prepare now:
Significantly, the standard of review for PPP loan appeals “is whether the SBA loan review decision was based on clear error of fact or law” and the appellant has the burden of proof by a preponderance of the evidence.4 Therefore, when appealing any decision related to a PPP loan, the appellant will be in the best possible position if it can show that the SBA made a clear error of fact or law based on the information that was before SBA at the time when SBA made its decision. This means that the PPP loan borrower should include as much helpful information as possible in the record before SBA makes its final decision. For example, when OHA decides size appeals in the government contracts context, it frequently rules that information that was not before SBA when the formal size determination was made is not relevant to the appeal.5 While SBA size protest cases show that OHA does sometimes allow supplementation of the record when the new evidence “is relevant to the issues on appeal, does not unduly enlarge those issues, and clarifies the facts on those issues,”6 it is still best for the borrower to include as much helpful information as possible in the administrative record. Therefore, borrowers should make every effort to get information into the administrative record that it believes will assist its PPP loan review by the SBA or any appeal of the SBA’s decision.
The memo also outlines steps companies should consider so they can get as much helpful information into the record to help in an appeal process.
-Lynn Jokela, TheCorporateCounsel.net May 24, 2021
