Client Alerts

Interim Final Rule: Ineligibility of Certain Borrowers Under Paycheck Protection Program (PPP)

Brian A. Haskel, Alan E. Sherman, Jason L. Sobel, Lori M. Waldron

Finance

April 04, 2020

While the CARES Act generally eliminated certain SBA restrictions and relaxed the SBA’s eligibility requirements to enable any business concern with no more than 500 employees to obtain a PPP loan, the SBA’s Interim Final Rule announced on the evening of April 2, 2020 reincorporates regulatory provisions that now may make businesses within specified industries ineligible for PPP loans. The impacted industries include (a) financial businesses primarily engaged in the business of lending, such as banks, finance companies and factors (pawn shops, although engaged in lending, may qualify in some circumstances), and (b) passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except eligible passive companies). For a complete list of ineligible businesses click here. Notwithstanding their inclusion on the foregoing list, nonprofit organizations should be eligible for PPP loans unless they are engaged in an ineligible business.

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