SBA Loan Reviews of Paycheck Protection Program Lender Partial Approval Forgiveness Decisions
Summary
SBA Procedural Notice, Control No. 5000-827666, effective January 27, 2022, to all Paycheck Protection Program lenders and SBA employees, on SBA loan reviews of lender partial approval forgiveness decisions. It sets a new process under which a borrower that disagrees with a partial approval, or was required to apply for forgiveness for less than the full loan, can ask through the lender for an SBA loan review. The lender’s notification must tell the borrower there are 30 calendar days to ask, and the lender must notify SBA within 5 calendar days of a timely request. SBA may select the loan in its sole discretion and may find forgiveness is less than, more than or the same as the lender decided; loan payments are not deferred during the review. The signature block names Jihoon Kim, Director, Financial Program Operations.
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“SBA Loan Reviews of Paycheck Protection Program Lender Partial Approval Forgiveness Decisions.”
Original at legacy.sba.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-loan-reviews-of-paycheck-protection-program-lender-partial-approva-de325e68df/
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SBA Procedural Notice
TO: All Paycheck Protection Program Lenders and CONTROL NO.: 5000-827666
SBA Employees
SUBJECT: SBA Loan Reviews of Paycheck EFFECTIVE: January 27, 2022
Protection Program Lender Partial Approval
Forgiveness Decisions
This Notice outlines a new process being implemented by SBA to allow Paycheck Protection
Program (PPP) borrowers to request an SBA loan review of partial approval forgiveness
decisions issued by their PPP Lenders.1 The procedures in this Notice apply to loan forgiveness
decisions submitted by Lenders to SBA through both the regular forgiveness process as well as
the Direct Borrower Forgiveness process.
Partial Approval Forgiveness Decisions
When a PPP Lender receives a forgiveness application from a borrower (either through the
Lender’s forgiveness process or the Direct Borrower Forgiveness process), the Lender must
review the application and submit a forgiveness decision to SBA within 60 days of receipt of the
forgiveness application. The Lender is required to submit its forgiveness decision to SBA
through the Paycheck Protection Platform (Platform). When submitting its forgiveness decision,
the Lender can choose the following categories to report the decision to SBA and request a
forgiveness remittance:
1) Approved in Full – Lender approved in full the forgiveness amount requested by the
borrower and the forgiveness amount requested by the Lender equals that amount. (This
choice applies where the amount of forgiveness requested by the borrower is less than the
amount of the loan, if the Lender approves the full amount of the borrower’s request for
partial forgiveness.)
1
Borrowers that have received full denial forgiveness decisions from their Lenders should continue to follow the
process outlined in the Interim Final Rule on Loan Forgiveness Requirements and Loan Review Procedures as
Amended by the Economic Aid Act (86 FR 8283, February 5, 2021), as amended.
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2) Approved in Part – Lender did not approve the full forgiveness amount requested by
the borrower and the forgiveness amount requested by the Lender is less than the
forgiveness amount requested by the borrower.
3) Denied – Lender denied the entire forgiveness amount requested by the borrower.
In all cases where the Lender selects Approved in Part, the Lender must enter its own data in the
Platform for each forgiveness line-item for which it determined a different amount than the
amount on the borrower’s loan forgiveness application. (Lenders are reminded that the PPP loan
amount entered in the Platform should always match the approved loan amount in SBA’s
ETRAN system and should not be manually changed to a different amount.) SBA uses the
forgiveness line-item amounts entered by the Lender to verify the calculations and facilitate the
final forgiveness payment to the Lender and associated interest calculation. See, SBA
Procedural Notice 5000-20038, Procedures for Lender Submission of Paycheck Protection
Program Loan Forgiveness Decisions to SBA and SBA Forgiveness Loan Reviews (issued July
23, 2020).
While SBA receives the borrower’s signed loan forgiveness application form (either directly
from the borrower or through the Lender) before forgiveness remittance, SBA does not request
supporting documentation unless SBA selects the loan for an SBA loan review. Additionally,
when a Lender issues a partial approval forgiveness decision to SBA, the borrower does not have
a right to appeal to the SBA Office of Hearings and Appeals (OHA) unless SBA selects the loan
for an SBA loan review and issues an appealable final SBA loan review decision.2
New Process for Borrower Requests for SBA Loan Review of Partial Approval Forgiveness
Decisions
Under the Interim Final Rule on Loan Forgiveness Requirements and Loan Review Procedures
as Amended by the Economic Aid Act (86 FR 8283, February 5, 2021), as amended
(Forgiveness and Loan Review IFR), SBA may review any PPP loan of any size at any time in
SBA’s discretion. SBA has received inquiries from borrowers that have received partial
forgiveness of their PPP loans because (1) their Lender issued a partial approval decision to SBA
on the borrower’s loan forgiveness application, or (2) their Lender required the borrower to
apply for forgiveness in an amount less than the full amount of the PPP loan. As a result of these
inquiries, SBA has decided to allow borrowers that received a partial approval decision from
their Lender that they do not agree with, or were required by their Lender to apply for
forgiveness in an amount less than the full amount of the PPP loan, to request, through their
Lender, an SBA loan review of their loan.
2
See, Final Rule on Borrower Appeals of Final SBA Loan Review Decisions Under the Paycheck Protection
Program (86 FR 51589, September 16, 2021).
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Must be accompanied by SBA Form 58
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Required Lender Notifications of Borrower’s Right to Request SBA Loan Review
When SBA remits a forgiveness payment to the Lender, the Lender is required to notify the
borrower of the remittance within 5 business days of receipt. If the Lender issued a partial
approval decision to SBA and SBA remits the full amount approved by the Lender, the Lender’s
notification to the borrower must include the Lender’s partial approval decision, including the
reason(s) why the Lender approved forgiveness in part but not in full. See, SBA Procedural
Notice 5000-20077, Paycheck Protection Program Borrower Resubmissions of Loan Forgiveness
Applications Using Form 3508S, Lender Notice Responsibilities to PPP Borrowers, and Offset
of Remittances to Lenders for Lender Debts (issued January 15, 2021) (Lender Responsibilities
Notice). Lenders are reminded that if SBA did not select the PPP loan for an SBA loan review
and thus did not issue a final SBA loan review decision, the Lender’s notification to the borrower
must not indicate that SBA issued a loan review decision and must not indicate that the borrower
may appeal the Lender’s decision to OHA, because the borrower has no such appeal right to
OHA in this circumstance.
Starting from the effective date of this Notice, when a Lender receives a forgiveness remittance
from SBA on a partial approval decision, including where the Lender required the borrower to
apply for forgiveness in an amount less than the full amount of the loan, the Lender’s post-
forgiveness remittance notification must inform the borrower that the borrower has 30 calendar
days from receipt of the notification to seek, through the Lender, an SBA loan review of the
Lender’s partial approval decision. Within 5 calendar days of a Lender’s receipt of a borrower’s
timely request for an SBA loan review, the Lender must notify SBA through the Platform. The
Lender’s notice to SBA of the borrower’s timely request for review must include a copy of the
Lender’s notice to the borrower of the reason(s) for the Lender’s partial approval decision. SBA
reserves the right to review the Lender’s decision in its sole discretion.
If SBA selects the loan for an SBA loan review as a result of the borrower’s request, the
borrower must continue to make payments on the remaining balance of the loan and the loan
is not deferred. (While a timely OHA appeal of a final SBA loan review decision extends a
deferment of loan payments, SBA’s granting of a borrower’s request for an SBA loan review of
a partial forgiveness decision is not an OHA appeal and payments are not deferred during the
SBA loan review or any subsequent appeal thereof.)
Additionally, within 30 calendar days of the date of this Notice, Lenders must notify all of their
borrowers on loans that previously received a partial forgiveness remittance from SBA as a result
of Lender partial approval decisions, including where the Lender required the borrower to apply
for forgiveness in an amount less than the full amount of the PPP loan, that the borrower has 30
calendar days from receipt of the Lender notification to seek, through the Lender, an SBA loan
review of the Lender’s partial approval decision. Within 5 calendar days of the Lender’s receipt
of a borrower’s timely request for an SBA loan review, the Lender must notify SBA through the
Platform. The Lender’s notice to SBA of the borrower’s timely request for review must include
a copy of the Lender’s prior notice to the borrower of the reason(s) for the Lender’s partial
approval decision. SBA reserves the right to review the Lender’s partial approval decision in its
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sole discretion. If SBA selects the loan for an SBA loan review as a result of the borrower’s
request, the borrower must continue to make payments on the remaining balance of the loan and
the loan is not deferred.
SBA will be providing Lenders with additional guidance to be posted in the Platform, including
step-by-step instructions, which will describe the process for Lenders to notify SBA through the
Platform of a borrower’s request for an SBA loan review of a Lender’s partial approval decision.
SBA Loan Reviews of Lender Partial Approval Forgiveness Decisions
When SBA, in its sole discretion, selects a loan for an SBA loan review as a result of a
borrower’s request on a Lender’s partial approval decision, the Lender will receive a notice that
SBA is reviewing the loan. The SBA loan review will be conducted in accordance with the
procedures in the Forgiveness and Loan Review IFR. Under the Forgiveness and Loan Review
IFR, when performing a loan review, SBA may review borrower eligibility, PPP loan amounts
and use of proceeds, and loan forgiveness amounts. Borrowers should be aware that if SBA
undertakes a loan review at the borrower’s request, SBA may determine that the borrower is
entitled to forgiveness in an amount less than what the Lender decided (including zero if, for
example, the borrower is determined to be ineligible for the PPP loan), an amount more than
what the Lender decided, or the same amount as the Lender decided.
When SBA completes a borrower-requested loan review of a Lender’s partial approval decision,
SBA may send a final SBA loan review decision to the Lender as outlined in the next section of
this Notice. Any final SBA loan review decision that is appealable to OHA by the borrower will
include a notice of the borrower’s right to appeal the decision in accordance with SBA’s Final
Rule on Borrower Appeals of Final SBA Loan Review Decisions Under the Paycheck Protection
Program. (86 FR 51589, September 16, 2021).
SBA Forgiveness Payment Remittances as a Result of Partial Approval Loan Reviews
If SBA determines, as a result of the SBA loan review, that the borrower is entitled to
forgiveness in an amount greater than the Lender’s partial approval decision and SBA has
previously remitted a partial forgiveness payment to the Lender, SBA will remit an additional
forgiveness payment to the Lender to make up the difference. SBA will issue an additional
Notice of Paycheck Protection Program Forgiveness Payment (Payment Notice) to the Lender.
If the SBA loan review results in a higher forgiveness amount, but less than full forgiveness,
SBA will also issue a final SBA loan review decision to the Lender. The Lender must provide a
copy of the Payment Notice and, if applicable, the final SBA loan review decision, to the
borrower within 5 business days of the remittance and comply with applicable requirements of
the Lender Responsibilities Notice.
If a borrower has begun making payments on their loan and the SBA loan review results in
full forgiveness, the Lender must refund all payments made by the borrower.
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If the SBA loan review results in a higher forgiveness amount, but less than full forgiveness,
the lender must re-amortize the PPP loan and refund any excess payments made by the
borrower.
If SBA determines, as a result of the SBA loan review, that the borrower is entitled to
forgiveness in an amount equal to the partial forgiveness amount previously remitted to the
Lender, SBA will issue a Payment Notice to the Lender confirming that the SBA loan review has
resulted in no change to the previous remittance amount. Within 5 business days of receipt of
the confirming Payment Notice from SBA, the Lender must provide the borrower with a copy of
the confirming Payment Notice, and comply with applicable requirements of the Lender
Responsibilities Notice.
If SBA determines, as a result of the SBA loan review, that the borrower is entitled to
forgiveness in an amount less than the partial forgiveness amount previously remitted by SBA to
the lender, SBA will issue a final SBA loan review decision to the Lender. Upon receipt of the
final SBA loan review decision, the Lender must comply with the requirements of the Lender
Responsibilities Notice. Additionally, the Lender must remit to SBA the excess amount of the
forgiveness payment previously made by SBA and re-amortize the PPP loan to account for the
difference.
Lender Dialogue with Borrowers Encouraged
As noted in the Forgiveness and Loan Review IFR, when reviewing a borrower’s forgiveness
application, if a Lender identifies errors in the borrower’s calculation or material lack of
substantiation in the borrower’s supporting documents, the Lender should work with the
borrower to remedy the issue. Lenders are encouraged to work with borrowers that have
requested an SBA loan review of a partial approval decision to determine whether the borrower
and the Lender can come to a resolution of the issue(s) that resulted in the partial approval, if
appropriate. If, as a result of this process, the Lender determines that the borrower is entitled to
forgiveness in an amount that exceeds the amount requested in the borrower’s original
forgiveness application, the Lender must obtain from the borrower a signed corrected PPP Loan
Forgiveness Application (SBA Form 3508, 3508EZ, 3508S, as applicable, or lender’s
equivalent) and supporting documentation (if required). Upon receipt of the signed corrected
forgiveness application and supporting documentation, the Lender may submit a forgiveness
payment correction request to SBA through the Platform. The forgiveness payment correction
request must include the signed corrected forgiveness application and supporting documentation
and an explanation of the Lender’s reasons for requesting the forgiveness payment correction.
SBA will review the forgiveness payment correction request and determine, in SBA’s sole
discretion, whether to grant the request.
Lenders are encouraged to work with borrowers that received partial approval decisions to allow
for maximum flexibility in repayment of the remaining balance of the loan. Lenders should
consult SOP 50 57 2, 7(a) Loan Servicing and Liquidation, for applicable SBA Loan Program
Requirements regarding loan modifications, including extensions of maturity.
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Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Questions:
Lenders may call the Lender Hotline at (833) 572-0502 for live assistance regarding Paycheck
Protection Platform access and support, policy questions and procedures, and Capital Access
Financial System (CAFS) and SBA’s Electronic Transmission (E-Tran) systems support.
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office.
Jihoon Kim
Director
Financial Program Operations
PAGE 6 of 6 EXPIRES: 1-1-23
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