STATEN ISLAND, N.Y. — During the height of the coronavirus (COVID-19) pandemic, the U.S. Small Business Administration (SBA) administered an $800 billion Paycheck Protection Program (PPP) aimed at helping businesses keep their workforce employed. The forgivable loan initiative, in which private funds were guaranteed by the federal government through the SBA with little to no repayment required, saved many small ventures from complete economic ruin. But now that the program has expired, questions linger about what, if any, funding now needs to be repaid.
“In total, 11.4 million First and Second Draw PPP loans were guaranteed for $789,776,462,485 between 2020 and the program close at the end of May 2021,” noted SBA spokesman Matt Coleman. “9,679,431, or 85% of all PPP loans have been forgiven in whole or in part for a total of $695,581,269,282 as of Feb. 20, 2022.”
One of the SBA’s most utilized COVID relief programs due to its tolerant guidelines, the PPP is currently in its forgiveness phase, in which records are individually analyzed to verify that compensation levels were maintained (up to $100,000 per employee) and at least 60% of loan proceeds were used for payroll costs and other eligible expenses. According to the numbers cited above, a good percentage of these loans have already been excused.
But the Philadelphia Inquirer reported that almost 350,000 loans made to small businesses in 2020 still have not been forgiven — most of them amounting to less than $25,000. Much of that lingering debt — about $28 billion — was discounted due to unfortunate filing errors or sudden rule changes, according to the media outlet, creating a burden for many of the country’s smallest businesses.
So what can you do if your claim for forgiveness is denied?
Here’s a closer look at the process and some tips for appealing it:
How are forgiveness decisions made?
“In general, decisions on forgiveness are first made by program-participating lenders. However, in 2021, the SBA and Biden-Harris Administration unveiled a direct forgiveness option for borrowers with PPP loans under $150,000,” Coleman said. “In order to utilize this option, lenders were required to sign up to participate in this program. If a borrower’s lender does not participate, then they are unable to utilize this option. Around 1,430 lenders are participating in the program and are listed here. Lenders not participating in direct forgiveness will run its Forgiveness program as initially put forth by the Agency — borrowers apply to lenders for forgiveness and, upon review, render a decision to the SBA to review, at which time a Final Loan Review decision is made.”
Can you appeal the decision if you are denied?
“All PPP borrowers can appeal the SBA’s PPP Final Loan Review decision to the impartial SBA Office of Hearings & Appeals in accordance with the rules and timeframes set for the program and through rules issued for this process,” Coleman said.
Is there any way to get help to review your form?
“SBA resource partners provide free, one-on-one assistance to small businesses and entrepreneurs and can work individually with any applicant to review their PPP Forgiveness materials, documents and applications,” notes Coleman. “You can find the closest SBA Resource Partner to you by visiting www.sba.gov/local-assistance.”
On Staten Island there are two sites that offer help: The New York State Small Business Development Center, located on the College of Staten Island campus, Willowbrook, or the Staten Island chapter of SCORE, located at 1855 Victory Blvd.
Do I have to report my PPP loan on my taxes?
“Regarding issues such as taxation/tax returns, the SBA refers you to our colleagues in government at the Internal Revenue Service who can provide more information concerning federal tax returns, as well as to New York State’s Department of Taxation & Finance to discuss state tax returns as well,” Coleman concluded.