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PPP Forgiveness: Responding to an SBA Audit, Best Practices for Mitigating Enforcement Risk

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, October 6, 2021

Recorded event now available

or call 1-800-926-7926

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.


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.



  1. Loan forgiveness: application and approval process
    1. Borrower eligibility for the loan
    2. Calculation of loan amount
    3. Use of proceeds
    4. Loan forgiveness calculation
    5. Reduced business activity safe harbor
  2. Appeals
    1. Appeals process when all or part of loan forgiveness is denied
    2. Appealing the lender's decision
    3. Appealing SBA's ruling
  3. SBA audits
    1. Who will be audited
    2. Factors the SBA will consider
    3. 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?


Edelberg, Paul
Paul B. Edelberg

Fox Rothschild

Mr. Edelberg is co-leader of the firm’s CARES Act and Paycheck Protection Program teams. For over four decades,...  |  Read More

Tully, Jared
Jared M. Tully

Practice Group Vice-Chair
Frost Brown Todd

Mr. Tully is the Vice-Chair of the Business Litigation Practice Group and serves a303-348-2404s the Team Leader...  |  Read More

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