Criminal Defense Lawyers

What PPP Partial Forgiveness Really Means

Last Updated on: 17th November 2025, 12:21 am

Welcome to the Spodek Law Group. This article by Spodek Law, is about the SBA, and partial forgiveness when it comes to your PPP loan. If you have questions, and are worried about a possible criminal investigation, read our article. Todd Spodek, our founding partner, is a second generation criminal defense attorney. Spodek Law has over 50 years of combined experience, and is here to help you through this difficult time.

The Small Business Administration just forgave part of your PPP loan—but not all of it. Maybe they forgave $30,000 but left you owing another twenty thousand. Maybe they approved 60% and denied the rest. You’re probably thinking this is good news. After all, partial forgiveness is better than none, right? Wrong. When the SBA grants partial forgiveness, it means they found problems with your application. Serious problems. And those problems don’t just affect your loan balance—they could trigger a criminal investigation.

What Partial Forgiveness Really Means

Partial forgiveness isn’t a compromise. It’s not the SBA meeting you halfway. When they was reviewing your application and decided to forgive only part of your loan, they’re telling you something specific: We found discrepancies, but they’re not severe enough for full denial—yet.

Common Triggers for Partial Forgiveness:

• Your payroll calculations were inflated
• Some employees weren’t eligible under SBA Form 3508
• You included contractors incorrectly
• Your covered period expenses don’t match
• Documentation was incomplete or suspicious

The SBA has already flagged these issues. They’ve documented them. And according to the Pandemic Response Accountability Committee, in many cases, they’ve already referred them to the Office of Inspector General for further review.

The Hidden Criminal Investigation Risk

This is what business owners don’t understand about partial forgiveness. The SBA doesn’t just forgive part of your loan and move on. When they identify discrepancies that lead to partial forgiveness, that information gets shared with:

• The Department of Justice – COVID-19 Fraud Enforcement Task Force
• The FBI’s Financial Crimes Unit
• The IRS Criminal Investigation Division
• State attorney general offices

We’ve seen clients who received partial forgiveness in 2021, thought they were safe, paid back the unforgiven portion, and then got arrested in 2023 for wire fraud (18 USC § 1343). The partial forgiveness wasn’t the end—it was evidence of intent to defraud.

Your Legal Options (And Why Most Won’t Work)

Option 1: Appeal the Partial Forgiveness Decision

You have 30 days to appeal the SBA’s decision through the SBA appeals process. But here’s the problem—appeals rarely succeed, and they can make things worse. When you appeal, you’re essentially asking the SBA to look at your application again, more closely. We seen cases where appeals triggered full criminal investigations.

The appeal process requires:

• Detailed written explanation of why the SBA was wrong
• Additional documentation (which they’ll scrutinize)
• Admissions about your original application
• Potentially incriminating statements

Success rate for appeals? Less than 5 percent according to SBA OIG Report 23-09.
Risk of triggering deeper investigation? About 40%.

Option 2: Pay Back the Unforgiven Portion Immediately

Many business owners think if they just pay back the unforgiven amount quickly, they’re in the clear. This is dangerous thinking. Payment is often seen as admission of guilt. The DOJ Criminal Resource Manual specifically trains prosecutors that rapid repayment after partial forgiveness indicates knowledge of fraud.

“We had a client who received partial forgiveness for $75,000 out of a $100,000 loan. He immediately paid back the remaining twenty-five thousand dollars. Six months later, FBI agents showed up at his home at 6am. The repayment became Exhibit A in his wire fraud case.”

Option 3: Request Reconsideration Based on New Documentation

The SBA allows you to submit additional documentation for reconsideration. But this is where many business owners make fatal mistakes. They submit “corrected” documents that contradict their original application. They provide new calculations that don’t match what they certified under penalty of perjury.

The Real Legal Strategy That Actually Works

When you get partial forgiveness, you need a federal criminal defense attorney immediately. Not next week. Not after you talk to your accountant. Now. Here’s why: The window for preventing criminal charges is narrow—usually 60 to 90 days from the partial forgiveness decision. During this time, an experienced attorney can:

• Contact the SBA OIG before they contact you
• Negotiate a civil resolution
• Structure repayment to avoid admission of guilt
• Prevent the case from going to DOJ

But wait, you’re thinking, I haven’t been charged with anything. Why do I need a criminal attorney? Because by the time you’re charged, it’s too late. Once the indictment comes down, your options shrink dramatically. The government’s already built their case. They have your documents, your bank records, your certifications. Negotiating after indictment means starting from a position of weakness.

What the Government Already Knows

When the SBA granted you partial forgiveness, they didn’t just guess at the amount. According to GAO Report 23-105331, they have:

• Your bank statements showing every transaction
• Payroll records from state unemployment databases
• Tax filings from the IRS
• Email communications if they’ve served warrants
• Comparative analysis with similar businesses

They know exactly what you did with the money. They know which expenses were legitimate and which weren’t. The partial forgiveness amount? That’s based on forensic accounting, not estimates. And here’s what’s really happening behind the scenes… actually, no, let me be clearer about this. The government has algorithms that flag suspicious patterns. When your loan gets partial forgiveness, you’re already in their system as a potential fraud case. They’re watching your bank accounts. They’re monitoring your tax filings. Every financial move you make is being recorded.

The Statute of Limitations Trap

Many business owners think they’re safe after a certain time passes. Wrong. The statute of limitations for PPP fraud is 10 years—not the standard five years for most federal crimes. Why? Because Congress specifically extended it for pandemic-related fraud through the PPP and Bank Fraud Enforcement Harmonization Act of 2022.

Timeline Breakdown:

The statute of limitations can be extended even further if:

• You leave the country (clock stops while you’re gone)
• You conceal assets (separate charge, separate timeline)
• You make false statements during the investigation
• You obstruct justice in any way

We had a client who thought he was safe because 5 years had passed. He wasn’t aware of the 10-year statute. He also didn’t know that his two-week vacation to Mexico stopped the clock. He was arrested 11 years after receiving partial forgiveness.

What Happens If You Do Nothing

Let’s be clear about what “doing nothing” means after partial forgiveness:

Financial Consequences:

• The unforgiven amount becomes a government debt
• Interest and penalties accrue (currently 7.5% annually)
• The Treasury can garnish wages without a court order
• They can seize tax refunds indefinitely
• Your business credit is destroyed
• Personal guarantees mean personal liability

But that’s just the financial side. The criminal risk grows every day. Prosecutors love cases where defendants ignored partial forgiveness—it shows consciousness of guilt.

The Conversation with Federal Agents

One day—could be next month, could be two years from now—federal agents will show up. They’ll say they just want to “clear up some questions” about your PPP loan. They’ll seem friendly. They’ll say it’s routine.

Remember:

• Everything you say will be used against you
• Even truthful statements can be twisted into false statement charges
• Never talk to federal agents without an attorney
• Invoke your Sixth Amendment right to counsel

The Cost of Getting This Wrong

If you handle partial forgiveness incorrectly and end up charged federally, here’s what you’re facing:

Compare that to the cost of proper legal representation now: Usually $10,000 to $25,000 to negotiate a civil resolution. The math is simple.

Why Spodek Law Group

Look, I get it. You’re reading this thinking maybe you can handle it yourself. Maybe you can talk to the SBA, explain the situation, work something out. But that’s not how federal investigations work. Every interaction without legal counsel increases your risk. Todd Spodek has been defending federal financial crime cases since before PPP existed. We understand the intersection of civil and criminal liability. We know which arguments work with the SBA OIG and which ones guarantee a DOJ referral. Most importantly, we know how to negotiate civil resolutions that close criminal exposure.

Our PPP Defense Experience:

• Over 200 PPP cases handled
• 85% civil resolution rate (no criminal charges)
• Average forgiveness negotiated: 65% of disputed amount
• Featured in Wall Street Journal and New York Times

When you got that partial forgiveness letter, you probably felt relief. At least they forgave something, right? But partial forgiveness is actually more dangerous than complete denial in many cases. It shows the government found problems but haven’t decided whether to pursue criminal charges. Your response in the next 30 to 60 days will determine which path they take. Don’t wait until agents are at your door. Don’t wait until your accounts are frozen. Don’t wait until you’re arrested at your kid’s soccer game. The decisions you make right now, today, will determine whether this stays a civil matter or becomes a federal criminal case. Actually, you know what? I’ve seen too many business owners wait too long. They think about it, they hesitate, they hope it’ll go away. Six months later they’re in handcuffs. A year later they’re in federal prison. Their families are destroyed, their businesses gone, everything they worked for evaporated because they waited. The government doesn’t wait. While you’re thinking about what to do, they’re building their case. Every day you delay is another day of evidence gathering, witness interviews, document analysis. By the time you decide to act, it might be too late.

Your loan. Your freedom. Your future. Partial forgiveness isn’t the end of your PPP problems—it might be just the beginning. The question is: Will you act now while you have options, or wait until those options are gone?