Call (858) 4501040. If your SBA PPP2 loan forgiveness request has been denied, it's crucial to be wellprepared for the appeal process. In this blog, we're providing essential tips to help guide you through the complexities of appealing an SBA PPP2 loan denial.

1. Establishing a 25% Reduction in Gross Receipts
The first step towards a successful appeal is demonstrating a 25% reduction in your gross receipts for the year 2020 compared to 2019. The assessment involves comparing your entire year's revenue reported in your income tax return for 2020 with that of 2019. However, if your 2020 tax return shows higher revenue, analyze each quarter to identify a 25% or greater reduction compared to the corresponding quarters of 2019. This reduction is a key factor in qualifying for PPP2 loan forgiveness.

2. Accurate and Supported Profit Loss Statement
While filing an appeal with the Office of Hearing and Appeals (OHA), it's essential to provide a profit and loss statement. This statement might require a CPA's signature under penalty of perjury, as it's an internal document that may lack thirdparty substantiation. Ensure this statement is meticulously prepared and supports your appeal's claims.

3. Calculating Payroll Expenses Correctly
PPP2 loan forgiveness calculations hinge on accurate payroll expenses. These expenses should match the same year, either 2019 or 2020. If using 2020, calculate gross wages and subtract excess compensation (amounts exceeding $100,000) for employees, shareholders, or owners. Add in employee benefits like 401(k) matching contributions and health insurance. Divide the total by 12 for the average monthly payroll expense. Multiply this average by 2.5 (or 3.5 for certain industries) to determine your PPP2 loan amount.

4. Affiliation Considerations
Affiliation, the consideration of multiple companies as a collective unit, is a critical factor in determining PPP2 loan eligibility. SBA defines small businesses based on factors like employee count and gross revenue. If you have affiliate companies, their employee counts and revenues might be included in your eligibility calculation. Be cautious, especially if investors or owners are connected to multiple companies, as this can impact your overall qualification.

5. Seek Professional Assistance
Navigating the PPP2 appeal process successfully often requires professional guidance. With the rules and regulations continuously evolving, having an experienced tax attorney by your side can significantly increase your chances of a favorable outcome. They can help you understand intricate calculations, ensure compliance with affiliation rules, and provide comprehensive assistance throughout the appeal process.

Appealing an SBA PPP2 loan denial necessitates a clear understanding of the intricate requirements involved. Ensure a 25% reduction in gross receipts, accurate payroll calculations, wellsupported profitloss statements, and a comprehensive understanding of affiliation rules. Seeking professional assistance from experts experienced in tax law and PPP appeals can be invaluable. If you have any questions or require assistance with your PPP2 appeal, please don't hesitate to contact us.

At Milikowsky Tax Law, we're dedicated to helping businesses navigate the complexities of PPP2 loan appeals. I'm John Milikowsky, the founder of Milikowsky Tax Law, and I hope these tips empower you to effectively navigate the appeals process. Feel free to reach out to us for further guidance.