11th Cir. Upholds Rule Barring Bankruptcy Debtors from Obtaining PPP Loans

ATLANTA — The Small Business Administration did not exceed its authority in barring small businesses in active bankruptcy proceedings from obtaining Paycheck Protection Program loans, the 11th Circuit U.S. Court of Appeals has ruled, because such loans are subject to existing conditions and regulations.

In a Dec. 22 order, the appellate panel further found the SBA’s no-bankruptcy rule is neither arbitrary, nor capricious, noting the agency has explained that lending to bankruptcy debtors “would present an unacceptably high risk of an unauthorized use of funds or non- repayment of unforgiven loans.”

Gateway Radiology Consultants, a small business debtor in an …