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September 29, 2020

AG Tong: Small employers could be hurt by PPP loan appeals process

Photo | Office of Attorney General William Tong Attorney General William Tong.
By Joe Cooper

Connecticut Attorney General William Tong has joined a coalition of 18 fellow attorneys general concerned that small businesses who received PPP loans during the COVID-19 pandemic could be at a disadvantage proving to the federal government that they qualify for forgiveness of those loans.

The coalition is opposing a proposed rule from the U.S. Small Business Administration that would govern the appeals process for businesses that have been denied a Paycheck Protection Program (PPP) loan as well as employers who the SBA determines haven’t met various requirements that would qualify a loan for forgiveness.

The low-interest loans -- part of Congress’ $2-trillion economic stimulus package -- were attractive to many small firms because they can be forgiven so long as employers spent a large portion of it on payroll and followed other requirements.

“Business owners need a fair chance to secure these funds, but this proposed rule makes it difficult to obtain a loan and even more difficult to appeal a denial," Tong said in a statement. "The SBA must implement a simple, fair process if we want our small businesses to survive COVID-19.”

The SBA’s proposed appeals process for PPP loans “leaves borrowers in the dark about crucial factual and legal findings by the SBA and, as such, at an extreme disadvantage,” the AGs wrote to the SBA on Monday.

They said many small businesses continue to suffer financially during the pandemic and would not be able to defend their PPP loan or forgiveness applications should they receive a denial from the SBA.

They urged the agency to take various actions to make the proposed process fairer for borrowers and applicants, including establishing factual and legal bases for the SBA’s final decisions on the loans, and ensuring independent and neutral decision makers decide the appeals.

[Read more: Here are CT’s top PPP lenders]

The coalition includes attorneys general from Illinois, California, Delaware, District of Columbia, Hawaii, Iowa, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Rhode Island, Oregon, Virginia, Vermont and Washington.

In Hartford, more than 320 Hartford-based companies, including restaurants, law firms, nonprofit and religious organizations, were approved for PPP loans ranging between $150,000 and $10 million.

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