SBA clarifies bankruptcy PPP eligibility
On April 6, the Small Business Administration (SBA) updated its Paycheck Protection Program (PPP) Frequently Asked Questions to clarify when an applicant or owner is no longer considered “currently involved in bankruptcy” for the purposes of PPP loan eligibility. In order to be eligible for a PPP loan, the SBA requires all borrowers to certify on their applications that the applicant, as well as any owner of 20% or more of the applicant, is “currently involved in bankruptcy.” The SBA FAQ states that “[i]If a plaintiff or owner has filed for Chapter 7 bankruptcy, the plaintiff or owner is considered “currently involved in bankruptcy” for the purposes of PPP eligibility until the bankruptcy court. issued a release order in the case. For Chapter 11, 12, or 13 bankruptcy applications, the applicant or owner will be “considered” currently involved in bankruptcy “for the purposes of PPP eligibility until the bankruptcy court has issued a decision. order confirming the plan in the case ”. A plaintiff or owner will not be considered “currently involved in bankruptcy” if the bankruptcy court has made an order dismissing the case, regardless of the type of bankruptcy petition. However, the ASB specifies that the order must be entered before the date of the PPP loan application.