The SBA Places $20 Million Aggregate Limit on PPP Loans to Corporate Groups

On April 30, 2020, the SBA released an interim final rule limiting the aggregate amount of Paycheck Protection Program loans that can be obtained by any single corporate group. The SBA defined a “corporate group” as businesses that are “majority owned, directly or indirectly, by a common parent.”

The limitation applies immediately with respect to any loan that was not fully disbursed as of April 30, 2020. Therefore, if any member of a corporate group receives loan proceeds after April 30, 2020, it should check to confirm that its disbursement would not cause the corporate group to exceed the $20 million cap. Failure of an applicant to withdraw or request cancellation of a pending PPP loan application or approved PPP loan not in compliance with the rule will be regarded by the SBA as a use of PPP funds for unauthorized purposes, with the result that the loan will not be eligible for forgiveness.

The SBA noted that businesses are subject to this limitation even if they have received a waiver of the affiliation rules (e.g., hospitality businesses and restaurants). The full text of the interim final rule is available here: PPP Interim Final Rule - Corporate Groups

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.