SBA Final Loan Review Decision — Concessions HH, JV v. SBA

Record facts

U.S. Small Business Administration, Office of Hearings and Appeals (OHA) · No. 1:24-cv-01870-WMR · Doc. 1-3 · 2022-11-21 · Docket on CourtListener

Full text

Exhibit C 
 
 
Case 1:24-cv-01870-WMR     Document 1-3     Filed 04/29/24     Page 1 of 4

 
SMALL BUSINESS ADMINISTRATION
WASHINGTON, DC 20416 
11/21/2022
VIA FORGIVENESS PLATFORM
Jamall Bell
Citizens Trust Bank
Re: PAYCHECK PROTECTION PROGRAM FINAL SBA LOAN REVIEW DECISION
 
Borrower: Concessions HH, JV
 
SBA Loan No.: 9159789000
 
Approved Loan Amount: $2,000,000.00
 
Loan Approval Date: 05/29/2021
 
Lender Forgiveness Decision Submission Date: 07/19/2022
 
Lender Forgiveness Decision Amount: $2,000,000.00
 
SBA Final Forgiveness Amount: $ 0.00 
Dear: Jamall Bell
The U.S. Small Business Administration (SBA) has completed its review of the above-
referenced Paycheck Protection Program (PPP) loan.  Based on a review of lender and/
or borrower submissions, and consideration of the facts and circumstances, SBA has
made a final SBA loan review decision.
 
SBA has determined that the borrower was ineligible for the PPP loan. The
reason(s) for SBA’s decision is as follows: 
After a review of the documentation provided, the SBA concludes that the
Borrower business which is part of a corporate group has received more
than $4,000,000 of 2nd draw PPP loans in the aggregate.
The documents provided validate that Russell Family et al is a “family” is
comprised of 98 entities defined by ownership, management, and identity of
interest.
This common ownership and/or common management is among Donata
Russell Major and/or H. Jerome Russell, Jr., and/or Michael Brent Russell, as
disclosed and attested on Borrower’s addendums to Form 3511. For this file,
PRM DEVELOPMENT LLC, the owner Otelia Realty, LP; which also has the
same common owners/management of H. Jerome Russell, Jr., Donata Russell-
Ross and Michael B. Russell. Affiliation Definition: Per 13 C.F.R. 121.103: “(a)
General Principles of Affiliation: (1) Concerns and entities are affiliates of
each other when one controls or has the power to control the other, or a
third party or parties controls or has the power to control both. It does not
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matter whether control is exercised, so long as the power to control exists.
(2) SBA considers factors such as ownership, management, previous
relationships with or ties to another concern, and contractual relationships,
in determining whether affiliation exists. (3) Control may be affirmative or
negative. Negative control includes, but is not limited to, instances where a
minority shareholder has the ability, under the concern’s charter, by-laws, or
shareholder’s agreement, to prevent a quorum or otherwise block action by
the board of directors or shareholders. (4) Affiliation may be found where an
individual, concern, or entity exercises control indirectly through a third
party. (5) In determining whether affiliation exists, SBA will consider the
totality of the circumstances, and may find affiliation even though no single
factor is sufficient to constitute affiliation. (6) In determining the concern’s
size, SBA counts the receipts, employees, or other measure of size of the
concern whose size is at issue and all of its domestic and foreign affiliates,
regardless of whether the affiliates are organized for profit.” Affiliation
Eligibility Requirements: Per Federal Register / Vol. 85, No. 73 / Wednesday,
April 15, 2020: “How do SBA’s affiliation rules affect my eligibility and apply
to me under the PPP? An entity generally is eligible for the PPP if it,
combined with its affiliates, is a small business as defined in section 3 of the
Small Business Act (15 U.S.C. 632), or (1) has 500 or fewer employees whose
principal place of residence is in the United States or is a business that
operates in a certain industry and meets applicable SBA employee-based
size standards for that industry, and (2) is a tax-exempt nonprofit
organization described in section 501(c)(3) of the Internal Revenue Code
(IRC), a tax-exempt veterans organization described in section 501(c)(19) of
the IRC, a Tribal business concern described in section 31(b)(2)(C) of the
Small Business Act, or any other business concern” Size Standard: Total
Employee Count for : Russell Family et al.. – across all 98 entities is 1,199
Per Borrower’s 3511 Addendum and/or CAFS, which exceeds the PPP Size
Standard of 300 employees.
Borrower exceeded the Corporate Group Max of $4MM, for Second Draw
loans at the time of disbursement. We recommend denial even though
borrower has a NAICS 72 waiver of the affiliation rules.
For this file, #9159789000, Conceptions Int LLC has a 87% ownership. When
reviewing the documentation provided, it is determined that the Russell et
al family received $2,000,000.00 in Second Draw loans, more than the
Second Draw corporate group limit of $4MM. 
Conceptions H & H Joint Venture #9159789000 exceeded corporate group
limits at the time of disbursement and is recommended for denial.
Therefore, the Borrower does not meet eligibility requirements for
forgiveness of the Paycheck Protection Program loan. We remain in
concurrence with the denial, based on the foregoing.
 
Based on the above stated reason(s), SBA has determined that forgiveness in the
amount of $0.00 is appropriate. Additional details regarding the forgiveness payment
amount (if any) will be provided in a Notice of Paycheck Protection Program
Forgiveness Payment.
Within 5 business days of the date of this letter, you must provide a copy of this final
SBA loan review decision to the borrower.
You must continue to service the loan. You must notify the borrower that the
remaining balance of the loan after application of the forgiveness payment (if any)
must be repaid on or before the maturity date. The notification must include the date
on which the first principal and interest payment is due and the amount of the
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borrower’s regular payment. As set forth below, if the borrower files a timely appeal
with SBA’s Office of Hearings and Appeals (OHA), the deferment period of the loan will
be extended pursuant to 13 CFR § 134.1211.
Pursuant to 13 CFR § 134.1201(b), the borrower has the right to appeal to SBA’s Office
of Hearings and Appeals a final SBA loan review decision that the borrower:
was ineligible for a PPP loan;
was ineligible for the PPP loan amount received or used the PPP loan proceeds
for unauthorized uses;
is ineligible for PPP loan forgiveness in the amount determined by the lender in
its full approval or partial approval decision issued to SBA; and/or
is ineligible for PPP loan forgiveness in any amount when the lender has issued a
full denial decision to SBA.
Any appeal must be made in accordance with the SBA Rules of Practice for Borrower
Appeals of Final SBA Loan Review Decisions Under the Paycheck Protection Program,
located at 13 CFR § 134.1201, et seq., including but not limited to the following:
An appeal petition must be filed with SBA’s Office of Hearings and Appeals (OHA)
within 30 calendar days after the borrower’s receipt of the final SBA loan review
decision. 13 CFR § 134.1202(a). To file and manage an appeal of a final SBA loan
review decision with OHA, refer to Office of Hearings and Appeals.
Borrower must include, among other things, a copy of this final SBA loan review
decision with its appeal. 13 CFR § 134.1204(a).
Borrower must provide you (the lender) with a copy of the timely appeal petition
filed with OHA so that you can extend the deferment period of the loan. 13 CFR §
134.1202(b).
An appeal to OHA is an administrative remedy that must be exhausted before
judicial review of a final SBA loan review decision may be sought in a federal
district court. 13 CFR § 134.1201(d).
Thank you for your cooperation.
Sincerely,
Office of Capital Access
U.S. Small Business Administration
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Case 1:24-cv-01870-WMR     Document 1-3     Filed 04/29/24     Page 4 of 4

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