ATTORNEY GENERAL RAOUL OPPOSES RULE GOVERNING PAYCHECK PROTECTION PROGRAM LOAN APPEALS
Chicago — Attorney General Kwame Raoul today led a coalition of 18 attorneys general in opposing a proposed Small Business Administration (SBA) rule governing the appeals process for Paycheck Protection Program (PPP) loans. The proposed rule would govern all SBA determinations considering PPP loans – including borrowers’ eligibility, loan amounts and the use of proceeds, and loan forgiveness. The changes to the appeals process instituted by the new rule are confusing for small businesses and put borrowers at a disadvantage as they try to navigate the appeal of adverse final loan decisions made by the SBA.
Created as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the PPP establishes loans intended to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 pandemic. It gives the SBA authority to guarantee up to 100 percent of qualifying loans and to forgive up to the full principal amount. In today’s comments opposing the proposed rule, Raoul and the coalition argue that the proposed changes to the appeals process for PPP loans are unfair and are detrimental to borrowers’ rights, violate due process and do not comply with the Administrative Procedure Act.
“Businesses rely on PPP loans to keep their doors open and support their workers during the uncertainty of the COVID-19 pandemic,” Raoul said. “At a time when the SBA should be offering assistance to small businesses, the proposed rule further disadvantages already struggling businesses by establishing an unfair process for appealing decisions about their loans.”
Raoul and the coalition assert that, for many businesses suffering during the COVID-19 pandemic, a PPP loan is the only way for those business to maintain operations and stay open. However, not all small businesses have the resources to defend their PPP loan in response to an SBA investigation and final review of their loan, and, as a result, small businesses rely on the process to appeal adverse final loan review decisions by the SBA. The attorneys general argue that the appeals procedure established by the proposed rule is confusing and puts borrowers at a disadvantage.
In the comments, Raoul and the coalition urge the SBA amend the proposed rule to afford borrowers a fair opportunity to maintain a PPP loan by:
Joining Raoul in the comments are the attorneys general of California, Connecticut, Delaware, District of Columbia, Hawaii, Iowa, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Rhode Island, Oregon, Virginia, Vermont and Washington.