We previously wrote two short articles about the Small Business Reorganization Act (“SBRA”) that went into effect on February 19, 2020.
The first article introduced small businesses and small business owners in San Diego (and around the country) to SBRA as another tool already in the bankruptcy toolbox for small businesses and small business owners to use to overcome financial difficulties due to the COVID-19 pandemic and stay in business.
The second article explained how the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, temporarily increased the debt limit to qualify as a debtor under SBRA to $7,500,000 for a period of one year or until March 26, 2021.
The CARES Act and “PPP” Loans. The CARES Act provides for a “Payroll Protection Program” (or “PPP”) Loan program where the loans are guaranteed by the Small Business Administration (“SBA”). To summarize, the PPP Loan program is intended to provide expeditious financial relief to qualifying small business borrowers in the United States during the COVID-19 pandemic. If the PPP Loan is used for certain forgivable purposes and certain employee and compensation levels are maintained, a qualifying borrower’s responsibility to pay both principal and interest may be completely forgiven.
“PPP” Loans and Bankruptcy. We now want to bring your attention to developing case law regarding whether a debtor, already in bankruptcy, can qualify for a PPP Loan.
To better understand the issues, please read this article in it’s entirety at the following link:
Can a Debtor Already in Bankruptcy Qualify for a PPP Loan?