The CARES Act backdrop, in one paragraph
The Paycheck Protection Program was authorized by the CARES Act and codified in section 7(a)(36) of the Small Business Act. Forgiveness is governed by section 1106 of the CARES Act and the Economic Aid Act amendments, with the SBA's implementing rules in 13 C.F.R. Parts 120 and 134. When the SBA conducts a loan review and issues a denial in whole or in part, the borrower's only direct review path is an OHA appeal under Subpart L. There is no APA suit until OHA jurisdiction is exhausted; OHA's decision is the final agency action that opens the federal court door.
Section-by-section: Subpart L
13 C.F.R. section 134.1201, jurisdiction
OHA has jurisdiction over appeals from final SBA loan review decisions, defined in section 134.1201(b). The triggering document is the SBA's final loan review decision, not the lender's notice and not an interim communication. Jurisdiction is the first thing the SBA Administrator will probe in a motion to dismiss, and the borrower's petition has to identify the operative final decision with specificity.
13 C.F.R. section 134.1202, the 30-day window
Section 134.1202(a) gives the borrower 30 calendar days from receipt of the final SBA loan review decision to file an appeal petition. The clock runs from receipt by the borrower, not from the date stamped on the SBA letter. Proof of receipt (or absence of proper notice under Part 140) matters when the SBA argues untimeliness. The 30-day window is jurisdictional and tightly enforced.
13 C.F.R. section 134.1203, petition contents
The appeal petition must identify the appealed decision, state the legal and factual grounds for appeal, and include supporting documents and citations. A skeletal petition that simply asserts disagreement is vulnerable to a failure-to-state-a-claim motion. The petition is the first document OHA reads, and the legal theory has to be in it from the start.
13 C.F.R. section 134.1204, standard of review
OHA reviews for clear error of fact or law. The borrower bears the burden. This is a high bar and the practical effect is that the merits brief has to be written to the administrative record, not from the borrower's preferred narrative.
13 C.F.R. section 134.1206, the administrative record
The SBA Administrator files the administrative record. The borrower's merits brief is built off that record, and new evidence is generally not admitted absent good cause. Curating the record on the petition side is therefore critical: every document the borrower wants in the record should be attached to the petition or moved into the record by stipulation early.
13 C.F.R. section 134.1209, oral hearings
OHA's strong default is the written record. Oral hearings under section 134.1209 are uncommon and require a showing that oral argument would materially assist the judge. Requesting a hearing in the petition or in the response to a dismissal motion is appropriate where credibility, documentary authenticity, or sequencing of agency steps is genuinely disputed.
Common denial bases I see in PPP final loan review decisions
Eligibility denials
The SBA concludes the borrower was not an eligible entity at the time of the loan. Examples include ineligible business types under 13 C.F.R. section 120.110, owner-employee or Schedule C miscalculations, affiliation rule violations, and size-standard issues. The merits-side response is built on the original PPP application, the borrower's certifications, and the contemporaneous documentation supporting eligibility at the loan date.
Forgiveness calculation denials
The SBA accepts the loan was eligible but disputes the forgiveness amount. Common sub-issues: covered payroll period definitions, the FTE reduction quotient, the salary reduction safe harbor, owner-compensation caps, and the 60/40 payroll-to-non-payroll split. These cases are won or lost on the underlying payroll and bookkeeping records.
Second-draw eligibility denials
The SBA denies a second-draw forgiveness because the revenue-reduction test (25% reduction in a comparable quarter) was not met or the prior-loan use of proceeds was non-compliant. These cases turn on quarter selection, comparable-quarter alignment, and the underlying revenue documentation.
False-certification denials
The SBA argues the borrower's necessity certification or other certifications were inaccurate. These are the most aggressive denials and frequently overlap with a False Claims Act referral. Counsel and the borrower need to be clear-eyed about the criminal-side exposure before drafting any merits brief.
What an OHA appeal does not do
- It does not pause administrative debt collection under Part 140 by itself. A borrower facing simultaneous Treasury offset, salary offset, or administrative wage garnishment needs to address Part 140 on its own track, in parallel with the OHA appeal.
- It does not award damages or attorneys' fees.
- It does not reopen the original PPP application. The record on appeal is the SBA loan review record, not the original application file.
- It does not relitigate the lender's role. Lender conduct can be a contextual fact but it is not a basis for OHA relief against the SBA.