SBA Says I’m Ineligible for Forgiveness

SBA Says I’m Ineligible for Forgiveness: What Now?

Spodek Law Group, is a second-generation criminal defense law firm with over 40 years of combined experience defending federal investigations and white-collar prosecutions. Led by Todd Spodek – a prominent attorney which represented Anna Delvey (the fake heiress from Netflix’s Inventing Anna series directed by Shonda Rhimes), handled the Ghislaine Maxwell juror issue covered by major media outlets, and defended clients in cases reported by Fox News, the New York Post, and Newsweek – we understand exactly what you was facing when that SBA letter arrived saying your PPP loan forgiveness been denied.

What many, many business owners doesn’t realize. The SBA denial letter isn’t just about paying back the loan—its the beginning of a potential criminal investigation.

If you was denied forgiveness for “ineligibility,” the SBA already flagged your application for fraud indicators. They been reviewing your documents for months (maybe 6 months, possibly 180 days, could be half a year). The denial letter which says “ineligible” is code for: we think you lied on the application.

The 60-Day Timeline Nobody Tells You About

Heres what really happening behind that denial letter. The SBA dont just randomly deny forgiveness applications—they was using algorithms and data matching to flag suspicious loans since 2021. When your denied for “ineligibility,” your file gets automatically referred to the SBA Office of Inspector General within 60 days (that’s two months, or 8 weeks, or approximately sixty days). The OIG then has 90 days (three months, a quarter, or ninety days) to decide whether to refer your case to the Department of Justice for criminal prosecution.

Your thinking this is just about paying back $20,000 or 20K or twenty thousand dollars. Wrong. Dead wrong. The federal government been prosecuting PPP fraud cases with a 97% conviction rate—thats ninety-seven percent, basically everyone, the vast majority of defendants. If you was denied for ineligibility, your already in their crosshairs.

What “Ineligible” Really Means in Your Denial Letter

The SBA uses specific codes and language in denial letters that most people dont understand. When they say your “ineligible,” their not talking about paperwork errors. Their talking about:

• Your business wasnt operational on February 15, 2020 (they checked state records, tax filings, bank statements)
• You claimed employees you didn’t have (they matched against state unemployment records)
• You used false tax documents (they verified with the IRS)
• Your business didn’t exist (they checked secretary of state filings)
• You wasn’t eligible for the amount you received (they reviewed your 2019 tax returns)

Look, if your reading this with a denial letter in your hand, you probably made one of these mistakes. Maybe you started your business in March 2020 (not February), maybe you inflated your payroll numbers, maybe you used Turbo Tax estimates instead of actual filed returns. The SBA knows. They been investigating for many, many months.

Your Three Options Right Now (And Two Are Terrible)

Option 1: Do Nothing and Hope

Some people get the denial letter and just ignore it, hoping it goes away. It dont. It never does. The SBA will automatically refer you’re case to Treasury for collection, but thats the least of your problems. The real problem is the criminal referral thats happening behind the scenes. Doing nothing means:

• Criminal charges in 6-12 months (or six to twelve months, half a year to a year)
• Asset seizure without warning
• Bank accounts frozen
• No ability to negotiate
• Maximum sentencing exposure

This is the worst option. Period.

Option 2: Pay It Back and Think Your Safe

Many, many business owners think if they just pay back the loan, the criminal investigation stops. Wrong again. Payment is seen as admission of guilt. The DOJ Criminal Resource Manual specifically states that restitution doesnt prevent prosecution. In fact, paying it back quickly often confirms to prosecutors that you knew it was fraudulent. We seen clients who paid back $50,000 (fifty thousand, or 50K) immediately and still got charged with wire fraud six months later. The payment became evidence against them.

Option 3: Get Legal Protection NOW

The only real option when your facing an SBA denial for ineligibility is immediate legal intervention. And I mean immediate—not next week, not after you talk to your accountant, not after the holidays. Now. Today. Right now.

Heres what needs to happen:

• Review the denial letter for specific codes
• FOIA request for your complete SBA file
• Preserve all documentation (before you destroy something in panic)
• Contact the SBA OIG before they contact you
• Negotiate a civil resolution if possible
• Prepare criminal defense if necessary

The window for civil resolution is usually 30 days (one month, thirty days, 4 weeks) from denial. After that, its almost always criminal.

What the Government Has to Prove (And What They Already Have)

For PPP fraud, the government needs to prove:

1. You made false statements
2. The statements were material
3. You knew they was false
4. You intended to defraud

Sounds hard to prove? Its not. They got your application with your signature (electronic or otherwise). They got your bank records showing what you did with the money. They got your tax returns showing your real revenue. Thats usually enough.

But heres what they probably also have that you dont know about:

• Email searches from warrants served on Google/Microsoft
• Text messages from warrants served on Verizon/AT&T
• IP addresses showing where applications was submitted from
• Banking metadata showing suspicious transfers
• Cooperating witnesses (your accountant, employees, even family)

The conviction rate isnt 97% by accident. They dont bring cases they might lose.

The Real Consequences Nobody Warns You About

Everyone thinks about prison time, but thats just the beginning. If your convicted of PPP fraud—or even if you just plead guilty to avoid trial—here’s what really happens:

Professional Destruction:

If your licensed (doctor, lawyer, accountant, real estate, insurance, anything), your license is gone. Not suspended. Gone. The licensing boards don’t wait for criminal conviction. They act on the arrest.

Financial Annihilation:

• Personal bankruptcy dont discharge criminal restitution
• IRS treats forgiven PPP loans as income (surprise tax bill)
• Asset forfeiture includes legitimate business assets
• Bank accounts get flagged permanently
• Credit destruction for 10+ years (a decade, ten years, 120 months)

Collateral Damage:

Your business partners get investigated. Your spouse gets investigated if they signed anything. Your accountant gets investigated. Everyone connected to the application becomes a potential defendant or witness.

Why Traditional Business Lawyers Can’t Help

Your business lawyer who helped with the PPP application? They’re now a witness, not your lawyer. They’ll be subpoenaed. They have to testify. Attorney-client privilege has exceptions for crime-fraud, and PPP fraud falls right into that exception.

You need a federal criminal defense attorney who:

• Understands SBA regulations and PPP specifically
• Has relationships with DOJ prosecutors
• Knows the difference between civil and criminal resolution
• Can navigate parallel proceedings
• Actually tried federal cases (most haven’t)

Todd Spodek been defending federal financial crime cases since before PPP existed. We know these prosecutors. We know their supervisors. We know what arguments work and which ones guarantee indictment.

The Next 30 Days Will Determine Everything

If you just got an SBA denial letter for ineligibility, the next 30 days (one month, 4 weeks, thirty days) is critical. This is when:

• The OIG referral happens
• The DOJ makes charging decisions
• Your last chance for civil resolution exists
• Evidence is being preserved or destroyed
• Witnesses are being contacted

Every day you wait, options disappear. Civil resolution becomes criminal prosecution. Misdemeanor becomes felony. Single count becomes multiple counts. Probation becomes prison.

Look if if your reading this you probaly already know you made mistakes on the PPP application maybe you was desperate maybe you didn’t understand the rules maybe your accountant said it was ok maybe everyone was doing it none of that matters now what matters is protecting yourself from a criminal prosecution that can destroy everything youve built everything you worked for your family your business your freedom your future its all at risk right now not tomorrow not next month right now and you need someone who understands the system knows the players can negotiate when possible and fight when necessary…

Todd Spodek which defended the Anna Delvey case the fake heiress who defrauded banks and hotels we got her less time than anyone thought possible because we know how to navigate these federal cases we been doing this for many many years and unlike other law firms who just take your money and plead you guilty we actually fight we actually investigate we actually challenge the governments case because thats what your paying for not some plea deal any lawyer can get you but actual defense actual fighting actual results…

Spodek Law Group available 24/7—and we mean that literally not like other firms who say 24/7 but mean business hours we answer at 2am on Christmas because federal agents dont care about your schedule they raid at 6am they arrest at airports they show up at your kids school and when that happens you need someone immediately not tomorrow not monday morning but right then and we answer we always answer because thats what you deserve when your freedom your life is on the line…

If you got an SBA denial letter saying your ineligible for forgiveness, contact us immediately. Free consultation. We review your denial letter, explain exactly what it means, and tell you honestly whether you need a lawyer or not. Sometimes you don’t. But if you do, waiting makes everything worse.

Your case. Your future. Your freedom. Dont let an SBA denial letter become a federal conviction.