SBA Final Loan Review Decision — Horseshoe Bay Resort v. SBA

Record facts

U.S. Small Business Administration, Office of Hearings and Appeals (OHA) · No. 1:24-cv-00040-DAE · Doc. 20-7 · 2023-01-24 · Docket on CourtListener

Full text

EXHIBIT 7 
 
SBA FLRD 
 
 
Case 1:24-cv-00040-DAE     Document 20-7     Filed 04/29/24     Page 1 of 4

 
SMALL BUSINESS ADMINISTRATION
WASHINGTON, DC 20416 
01/24/2023
VIA FORGIVENESS PLATFORM
Julie McCaulley
BancorpSouth Bank
Re: PAYCHECK PROTECTION PROGRAM FINAL SBA LOAN REVIEW DECISION
 
Borrower: HORSESHOE BAY RESORT HOLDINGS, LLC
 
SBA Loan No.: 3866357206
 
Approved Loan Amount: $2,370,747.50
 
Loan Approval Date: 04/27/2020
 
Lender Forgiveness Decision Submission Date: 09/24/2021
 
Lender Forgiveness Decision Amount: $2,370,747.50
 
SBA Final Forgiveness Amount: $ 0.00 
Dear: Julie McCaulley
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 as follows:
After review of the documentation provided, the SBA concludes the
Borrower business, or together with its affiliates, exceeds the maximum
allowable number of employees and the SBA small business size standards.
It is verified that the borrower selected Employee-Based size standard when
making its eligibility certification per the SBA Form 3511 dated April 22,
2022. The borrower and its affiliates have a combined employee count of
593, which exceeds SBA’s Employee-Based size standard of 500 employees.
It is verified per page 3 of “Statement of Operations 2019” that gross
receipts for the Calendar year of 2019 were $32,665,891. Per page 37 of the
internal attachment “Attorney Letter”, gross receipts for the fiscal year of
April 9, 2019 through March 31, 2020 were $61,079,267. Both of these
reported revenues exceed the Receipts-Based size standard of $19,000,000
Case 1:24-cv-00040-DAE     Document 20-7     Filed 04/29/24     Page 2 of 4

for NAICS code 713910.
The subject loan was also determined to be ineligible for an affiliation
waiver as it does not have a NAICS code beginning with 72. It is noted per
page 4 of the internal attachment “Attorney letter” that the largest source
of revenue for the Borrower was from Membership rather than Food &
Beverage. The documents “Statement of Operations 2019” and “Statement
of Operations 2020” further confirm that the majority of revenue was
derived from Membership rather than Food & Beverage. Per 13 CFR 121.107
“In determining the primary industry in which a concern or a concern
combined with its affiliates is engaged, SBA considers the distribution of
receipts, employees and costs of doing business among the different
industries in which business operations occurred for the most recently
completed fiscal year.” Therefore, the SBA concludes that a 72 NAICS code
affiliation waiver does not apply in this case.
Additional documentation was requested to evaluate the borrower’s
eligibility under alternative size standard, such as a completed SBA Form
3511 inclusive of all affiliates and comparable documentation to verify
Tangible Net Worth and Average Net Income. The requested documentation
was not provided, therefore an evaluation of Alternative Size Standard
cannot be completed. 
 
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
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
1. 
2. 
3. 
4. 
• 
Case 1:24-cv-00040-DAE     Document 20-7     Filed 04/29/24     Page 3 of 4

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-00040-DAE     Document 20-7     Filed 04/29/24     Page 4 of 4

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