PPP loans to be offered to some bankrupt businesses, including farms, following ProPublica investigative story

"The federal government has quietly reversed course on a policy that had kept thousands of businesses from applying for pandemic economic aid, with only weeks to go before funds are expected to run out," Lydia DePillis reports for ProPublica. Now, individuals and companies in Chapter 11, 12, or 13 bankruptcy are eligible for Paycheck Protection Program loans if a judge has approved their reorganization plan. The loans are forgiven if the loan is mostly spent on payroll.

Previously, the Small Business Administration "had battled in court against several bankrupt companies attempting to apply for PPP loans, and did not change course even after Congress explicitly passed legislation in December allowing it to do so," DePillis reports.

But in early March, ProPublica reported on the rule. "Referencing ProPublica’s story, the National Association of Consumer Bankruptcy Attorneys wrote a letter to newly installed SBA Administrator Isabella Guzman urging her to follow Congress’ suggestion and tell the Executive Office for U.S. Trustees — a division of the Justice Department that oversees most American bankruptcy courts — to allow debtors to receive PPP loans," DePillis reports. "The agency has not yet contacted the Justice Department. But on April 6, the SBA released new guidance as part of its frequently asked questions for the program, redefining what it means to be 'presently involved in any bankruptcy.' ... A spokesperson for the SBA said the explanation had been added for 'clarity.'"