Now, some borrowers whose requests for forgiveness were denied are taking their cases to court.
A New Jersey dealership can’t compel the Small Business Administration to forgive part of a $2 million Paycheck Protection Program loan, a federal appeals court has ruled.
The SBA justifiably rejected BMW of Springfield’s application for loan forgiveness, saying BMW of Springfield was ineligible for the money in the first place, the 3rd Circuit U.S. Court of Appeals held.
The dispute arose from a federal low-interest loan program enacted in 2020’s Coronavirus Aid, Relief and Economic Security, or CARES Act, to help small businesses meet their payroll and survive during the pandemic era.
In implementing the Paycheck Protection Program, the SBA capped the collective amount that entities with shared majority ownership could borrow at $20 million for first-draw, or first-round, loans and $4 million for second-draw loans.
The SBA justifiably rejected BMW of Springfield’s application for loan forgiveness, saying BMW of Springfield was ineligible for the money in the first place, the 3rd Circuit U.S. Court of Appeals held.
The dispute arose from a federal low-interest loan program enacted in 2020’s Coronavirus Aid, Relief and Economic Security, or CARES Act, to help small businesses meet their payroll and survive during the pandemic era.
In implementing the Paycheck Protection Program, the SBA capped the collective amount that entities with shared majority ownership could borrow at $20 million for first-draw, or first-round, loans and $4 million for second-draw loans.
In the New Jersey case, the operator of a BMW dealer in Springfield sued the SBA Tuesday seeking forgiveness of $936,963. The SBA said the company, known as Celebrity of Springfield, is part of a larger corporate group that received a loan of $5.06 million, which is far more than the $4 million corporate maximum. Therefore, Celebrity’s $2 million loan is ineligible for forgiveness, the SBA said in its final loan review decision.
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