Did Your Lender Approve Only Partial Forgiveness of Your PPP Loan? You May Be Able to Request an SBA Loan Review

Effective January 27, 2022, the Small Business Administration (SBA) issued Procedural Notice 5000-827666. This new process allows those Paycheck Protection Program (PPP) borrowers who have received partial forgiveness approval by their lender to request SBA review of that forgiveness decision.  SBA review is entirely at the SBA’s discretion.

The SBA has received many inquiries from borrowers who received partial forgiveness of their PPP loans because either their lender issued a partial approval decision to the SBA on the borrower’s loan forgiveness application, or the lender required the borrower to apply for forgiveness in a lesser amount than the full PPP loan.  As a result, the SBA has decided to allow those borrowers to request through their lender an SBA loan review.

Within 30 calendar days of the date of this procedural notice, lenders are required to notify all their borrowers on loans that have previously received partial forgiveness remittance from the SBA as a result of the lender’s approval decisions.  In addition, effective January 27, 2022, the lender’s current post-forgiveness remittance notification must inform the borrower that they have 30 calendar days from the receipt of the notification to require an SBA review of the decision. 

This required notification includes those cases where the lender required the borrower to apply for forgiveness in lesser amounts that than the full PPP loan.  The notification from the lender should include the information that the borrower has 30 calendar days from the receipt of the lender notification to seek through the lender an SBA review of the lender’s partial approval decision.  Further, the lender then has 5 calendar days of the borrower’s timely request for the SBA loan review to notify the SBA through the SBA lender platform.  Additional guidance will be forthcoming for lenders, including step-by-step instructions.

Important Things to Note

If the SBA selects a loan for review, there are four possible determinations.  Remember, the selection for review is solely at the Small Business Administration’s discretion.

  1. The SBA agrees with the lender’s determination. In this case the SBA will issue a Payment Notice to the lender confirming the review has resulted in no change.
  2. The SBA determines that the borrower is entitled to full forgiveness.  If the borrower has begun to make payments on their loan, the lender must refund all payments made by the borrower. The SBA will remit an additional forgiveness payment to the lender to make up the difference if the SBA has previously remitted a partial forgiveness payment.
  3. The SBA determines the borrower is entitled to partial forgiveness, but in a greater amount than previously determined.  The SBA will issue a notice to the lender.  The lender must re-amortize the PPP loan and refund any excess payments made by the borrower.
  4. The SBA determines the borrower is entitled to a lesser amount of forgiveness. The SBA will issue a final SBA loan review decision to the lender.  The lender will be required to remit to the SBA any forgiveness payments made by the SBA.  The PPP loan will be re-amortized for the larger amount to account for the difference which the borrower must repay.

If a borrower requests an SBA loan review and SBA does select the loan for review, the borrow must continue to make payments on the remaining balance of the loan and the loan is not deferred, nor are they deferred during any appeal that is authorized.

When the SBA concludes a borrower-requested loan review of a partial-approval decision by a lender, the SBA may send a final SBA loan decision to the lender. Any final SBA loan review decision that is appealable to Office of Hearings and Appeals by the borrower will include a notice of the borrower’s right to appeal the decision in accordance with regulations.


Written by Erin Kidd, EA, AFC®, MBA:

Erin Kidd is the Special Projects Manager at Thompson Greenspon and has nearly a decade of tax experience specializing in individual taxation. Throughout her career, she has focused on simplifying complex tax issues and educating clients to maximize their tax benefits and plan for future events.

Erin holds a Bachelor’s and Master’s Degree in Business Administration from Morehead State University, is an Enrolled Agent, a federally licensed tax preparer who has unlimited rights to practice before the IRS, and an Accredited Financial Counselor ®. She has been recognized by the Garrison Commands of West Point, NY and Fort Leavenworth, KS for her contributions to the military community for her work with the installations’ Volunteer Income Tax Assistance Centers.


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