Potential stimulus bill could allow companies in bankruptcy to pursue PPP loans… says Rose Law Group attorney Dan Gauthier

By Andi Medici | Washington Business Journal

Small businesses that have filed for bankruptcy, or nearing that step, might get their own shot at a Small Business Administration Paycheck Protection Program loan under a stimulus provision being debated in Congress.

The proposal, filed as part of broader stimulus measures last week by Sens. Marco Rubio, R-Fla., and Susan Collins, R-Maine, would allow the SBA administrator to open the forgivable loan program to companies that are, or plan to be, in bankruptcy proceedings — a category of businesses that the SBA had initially shut out of the PPP.


“A pending stimulus bill called the Continuing Small Business Recovery and Paycheck Protection Program Act may allow businesses in bankruptcy proceedings to receive Paycheck Protection Program loans, subject to court approval. This is a step in the right direction to allow these businesses to access PPP loans, which are potentially forgivable. However, as written, the bill does not require the SBA to accept loan applications from bankrupt borrowers and the SBA has previously rejected loan applications from businesses in bankruptcy. If the bill passes, the SBA administrator would need to decide or be required to accept these applications.”

Dan Gauthier, Law Clerk at Rose Law Group
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August 2020