PPP Forgiveness: Responding to an SBA Audit, Best Practices for Mitigating Enforcement Risk
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Wednesday, October 6, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss the PPP audit process after loan forgiveness has been determined and how to prepare for and respond to an SBA audit. The discussion will include a regulatory update, a review of the PPP loan forgiveness application, and best practices for documenting PPP eligibility and compliance.
Mr. Edelberg is co-leader of the firm’s CARES Act and Paycheck Protection Program teams. For over four decades, his practice has focused on corporate and commercial law for privately owned businesses, with an emphasis on general business counseling, commercial finance, mergers and acquisitions, private equity and venture capital and international trade and cross-border transactions. Mr. Edelberg’s multifaceted practice enables him to serve the domestic and international needs of a wide range of clients, particularly those with interests in China.
Mr. Tully is the Vice-Chair of the Business Litigation Practice Group and serves a303-348-2404s the Team Leader for the firm’s Community Bank and Financial Institutions Team. He has extensive experience helping clients solve complex problems facing their businesses. He concentrates his practice in the areas of commercial litigation and bankruptcy matters. He routinely represents national banks in various types of litigation, including consumer and commercial disputes. He also represents businesses navigating complex debt issues in bankruptcy court. Jared works closely with his clients to obtain an effective and efficient resolution of litigated matters through litigation or seizing early resolution possibilities.
The CARES Act and subsequent legislation made three rounds of PPP financing available to small businesses. Those loans have been funded and many loan forgiveness applications submitted, but loans where forgiveness has been awarded remain subject to SBA audit. Borrowers are potentially subject to fraud claims and reimposition of the obligation to repay the loan. They and their counsel must prepare to respond to SBA audits.
In evaluating a borrower's loan forgiveness application, the SBA will consider several factors, including whether a borrower was eligible for a PPP loan, whether the borrower used the proceeds for the purposes enumerated with the CARES Act regulations, and whether the subject borrower calculated its expected loan forgiveness amount properly.
The SBA recently dropped its position on mandatory audits of loans over $2M and the completion of the Loan Necessity Questionnaire, but it has reserved the right to audit PPP loans of any size. Certain exemptions are available, but the exemption must be carefully documented.
SBA audit requests can be extensive. The borrower must be prepared to provide documentation supporting its eligibility for the PPP loan, confirming the accuracy of its loan forgiveness application, and otherwise demonstrating the borrower's compliance with PPP requirements. Good documentation retention protocols are essential.
Listen as our authoritative panel discusses the PPP audit process and how to best prepare for and respond to an SBA audit of a PPP loan.
- Loan forgiveness: application and approval process
- Borrower eligibility for the loan
- Calculation of loan amount
- Use of proceeds
- Loan forgiveness calculation
- Reduced business activity safe harbor
- Appeals
- Appeals process when all or part of loan forgiveness is denied
- Appealing the lender's decision
- Appealing SBA's ruling
- SBA audits
- Who will be audited
- Factors the SBA will consider
- Preparing for and responding to an SBA audit
The panel will review these and other critical issues:
- What factors do the lender and the SBA consider in reviewing a PPP loan forgiveness application?
- What documentation should the borrower retain to support its loan eligibility and the forgiveness application?
- How should the borrower respond to an SBA audit request? What is the role of the lender?
- What is the process for appealing an unfavorable loan forgiveness decision or audit?
Related Courses
Structuring Uptier and Drop-Down Financing Transactions: Crafting Loan Terms to Manage Exposure and Mitigate Risks
Thursday, May 29, 2025
1:00 p.m. ET./10:00 a.m. PT