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SBA PPP Loans - Yet Another Government Mess
Why can’t we do even the simplest things correctly, anymore?
Almost a year ago, in response to the COVID-19 pandemic, the federal government passed the CARES ACT. One fairly simple provision of that legislation was the Paycheck Protection Program (PPP) loan provisions. Its basic intention was simple. It said that if you applied for a loan for funds you needed to keep your employees on the payroll that “loan” would convert to a grant and your “debt” would be forgiven.
What could be easier? You simply had to submit a short application and copies of your last 12 months' payroll records to a local lender and they would submit it to the Small Business Administration (SBA) and then place the funds in your checking account at Bank of America. And that’s pretty much what happened. In fact, the process was so free of onerous “underwriting” stipulations that the government didn’t keep tabs on the huge, public, multi-billion dollar corporations that were cashing in on it.
But that’s another story.
In our case, Community Venture Partners, Inc. applied for a PPP loan to cover the payroll costs for one staff member and an assistant for about 4 months starting on May 1, 2020. That loan came to $12,743 (yes, we are very low-paid here at CVP). Our loan was funded quickly and we went on with our business.
In December of 2020, we were required to file for loan “forgiveness.” We had spent 100 percent of the loan proceeds on employee salaries, which were all eligible for full forgiveness under the federal regulations. We filed the required form through Bank of America and we were told we would get a final determination within 30 days.
So far, so good, until…
As the months dragged on, we still had not gotten any response from the government or Bank of America. So, we finally started calling the bank to find out what’s what. What we learned was that the bank was clueless and had no answers.
Then on March 3, 2021, we received an email from the SBA saying that full forgiveness of our loan had been denied. No reason was given.
The very next day, we called Bank of America. The first person we called was the loan officer who had processed our loan, determined our loan amount, and submitted our loan application to SBA. We left numerous messages and sent emails in the following days. He never responded to any of them.
We then found a phone number for “loan forgiveness” at Bank of America and called.
We spoke with someone named “Rafid.” Rafid told us not to worry because we could appeal the decision directly to the Office of Hearings and Appeals at the SBA. He gave us an email address (OHA@sba.gov) and a phone number to call, and a website to go to for more information.
The website he provided (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program) didn’t have any information about filing an appeal of a PPP loan forgiveness. So, we called the phone number for the SBA that Rafid gave us: 202-401-8200.
The automated answering robot said,
“Thank you for calling the Small Business Association. Your wait time is 22 hours and 14 minutes.”
We then sent an email to the Office of Hearings and Appeals at OHA@sba.gov and copied it to another email on the OHA website: OLITService@sba.gov.
We received a quick response from OLITService@sba.gov but it just redirected us back to the first email address OHAfilings@sba.gov and to yet another email address:
7aPaycheckloanprogramquestions@sba.gov.
We contacted that email address, too. The response from OHA@sba.gov stated (the emphasis is their’s),
“The OHA only accepts appeals after (1) the SBA has conducted a review of your PPP loan or loan forgiveness application AND (2) the SBA has provided you with a FINAL LOAN REVIEW DECISION
“If this has not occurred, you should contact your local SBA District Office lender or your [sic] for further guidance.
“When the lender issues a decision to SBA declining the borrower’s loan forgiveness application (in whole or in part) the lender must notify the borrower in writing of the lender’s decision.
“Within 30 days of notice from the lender, a borrower may make a request to the Lender requesting that SBA “review” the lender’s decision. This is not a request that is submitted to the Office of Hearings and Appeals. SBA reserves the right to review the lender’s decision in its sole discretion.
“The Office of Hearings and Appeals will not adjudicate any request received directly from the PPP borrower for an SBA “review” or reconsideration of a Lender’s forgiveness decision.”
Simply put, this is saying that we cannot file an appeal directly with OHA, but need to notify our lender (Bank of America) that we want to file an appeal, and they have to do that for us. And the caveat is that we only had 30 days to do all this or we would lose our right to appeal.
The response from 7aPaycheckloanprogramquestions@sba.gov, stated the exact same thing and added,
“When SBA makes a final determination on a forgiveness request, the lender is required to provide the borrower with SBA’s decision to specifically identify the borrower’s eligibility to “appeal” the decision with the Office of Hearings and Appeals, and to provide directions on how to do so.
Bank of America had failed to do any of this.
Another response we received was from OLITService@sba.gov. It said that the OHA@sba.gov email address is only for use by lenders and the responsibility of the lender, Bank of America, is to submit a request for appeal upon receiving a request from the borrower.
We decided to research all this.
We read all the SBA websites and we read the actual CARES ACT legislation. The websites all confirmed that SBA regulations required that appeals have to be filed by the borrower through the bank/lender, which then is responsible for filing it with the SBA.
We also read the Federal Register, which states,
“Federal Register /Vol. 85, No. 167 /Thursday, August 27, 2020 /Rules and Regulations 52885, which is linked from home.treasury.gov/system/files/136/PPP-IFR-Appeals-of-SBA-Loan-Review-Decisions-Under-the-PPP.pdf, states the following regarding filing an appeal to contest the decision of the SBA on the amount of PPP loan forgiven:
“The appellant must serve a copy of the appeal petition with attachments on the Associate General Counsel for Litigation, U.S. Small Business Administration, 409 Third Street SW, Washington, DC 20416, OLITService@sba.gov. The appellant must attach to the appeal petition a signed certificate of service meeting the requirements of § 134.204(d). This section further provides that an appeal petition which does not include the above may be dismissed by the Judge and permits SBA.”
It turned out that all of the information about appeals, published in the CFR’s, was wrong because it's been superseded by unpublished new regulations, which I guess we're supposed to know by telepathy.
It was now March 15th
We called Bank of America, again.
This time we spoke with a woman named Randi Pickett. She was extremely nice and apologetic and said she would review our file. After more than an hour on hold, she said that Bank of America had made a clerical error when they underwrote our loan and she was going to correct it.
She promised to escalate this to the “remediation team,” note everything we had discussed in our “file” for others to see, and to call us back on Friday, March 12th, to confirm that it had been corrected. She said that there was no need for me to do anything further and that I did not need to file an appeal with SBA because it was Bank of America’s error. She gave us her “personal extension” and said to call her with any questions.
We waited. Ms. Pickett never called us back.
On March 16th, we received a payment notice from SBA, demanding that we repay the portion of our loan that was disqualified in the amount of $1,102.37.
March 17, 2021
The following day, we called the “personal extension” phone number Randi Pickett had given us to call her at Bank of America if there was “anything at all” we needed. It was a public line and no one knew who she was. She never did a single thing she had said she would do.
We had to start all over again.
We spoke with a man who said his name was “Jaggar” (he would not give his last name). To say that he was ignorant and argumentative would be an insult to ignorant and argumentative people.
He was adamant that appeals were not the responsibility of Bank of America and that it was my responsibility to file an appeal directly with the SBA at OHA@sba.gov... the office that had told us that this email could only be used by lenders to file appeals.
After more than an hour and a half of being put “on hold” while he was “researching,” he confirmed that Ms. Pickett had failed to do anything about my case. She did not escalate it to the remediation team, nor did she leave any notes in our file as she had indicated.
We asked Rafid if we could talk to his manager. He claimed that there were no managers at Bank of America. When we questioned that, he hung up on us.
We called Bank of America back, again
This time we got a woman named Vivian, who listened, check to see if anyone named Rafid or Pickett has worked on my account, or even at the bank, and finding nothing transferred us to “Suzie.”
We started from square one with Suzie and told her we were just trying to get the bank to file an appeal to the SBA for us. She said we had to file an appeal directly with SBA (at, of course, OHA@sba.gov) but she also confirmed that they did indeed have managers at Bank of America but that her manager would be “in meetings all week.” But she promised he would call us first thing in the morning.
He never called us back.
Suzie said that she escalated our case to the “remediation team.” However, she indicated that it could take up to three weeks to get a response or for them to take action. We reminded her that we needed an immediate filing of our appeal because the payment was due and our appeal window was closing. The SBA was demanding that we commence payments in less than 10 days or incur financial penalties.
I asked her what were we supposed to do in the meantime, with the clock ticking on penalties. She said she did not know. She recommended we call the SBA at 202-401-8200 (the 22 hour hold time).
We were back to square one, yet again.
We called back and just by chance got Suzie again and asked her for an address so we could send our filing request to Bank of America in writing. She said she did not have a street address for Bank of America, but would “research that” and would definitely call us back.
She never called back.
Out of options, we filed a hard copy complaint via snail mail with the Corporate Offices of Bank of America in Charlotte, North Carolina, and with the San Francisco Office of the SBA, and with the San Francisco Corporate headquarters of Bank of America in San Francisco. We reminded them all that time was of the essence and that the SBA had sent us additional payment demand letters, and that the 30-day clock ran out on our ability to appeal through Bank of America on April 4th.
We have not heard back from any of them.
In the meantime, we had found yet another email address for the SBA regarding appeals: PPPforgivenessrequests@sba.gov. We sent them a full description of our dilemma on March 17, 2021.
On March 18th, we received the following reply,
“Greetings:
“Federal Regulations provide for an appeal process in regard to forgiveness amounts, however no procedure has yet been announced. SBA will be communicating the process to lenders will be notified of the roll out of the process.”
Coda
On Monday the 22nd, we have an appointment to speak with the Office of General Counsel, U.S. Small Business Administration, at 409 3rd Street SW in Washington, D.C.
Bob Silvestri is a Marin County resident and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO CVP to enable us to continue to work on behalf of California residents.