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COVID-19 Relief Law - Farmers in Chapter 12 Ineligible for PPP Loans

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The Coronavirus Aid, Relief, and Economic Security (“CARES Act") established a relief measures to help combat the economic impact of COVID-19. The PPP established through the SBA has announced guidance for farmer's eligibility for PPP loans during a Chapter 12 bankruptcy.

In the SBA’s Fourth Interim Final Rule, posted to its website on April 24, 2020, the SBA stated in a "Q&A" that a business would not be approved for a PPP loan if the business was in bankruptcy.  The rationale given was that making a PPP loan to an applicant in bankruptcy would be too risky.

Chapter 12 was designed as a response to the unique financial difficulties that farmers face.  Chapter 12 is conceptually and statutorily similar to other reorganization-type bankruptcies, but provides more flexibility in making periodic payments to take into account the seasonal nature of many farming or fishing operations.  Under Chapter 12, the debtor proposes a repayment plan that lasts three to five years.  Chapter 12 is also less expensive and, in many respects, less complex than other forms of reorganization bankruptcy. 

For any questions or assistance, please contact the Bankruptcy Attorneys at Fazzio Law, we are in your corner!


For more information on PPP eligibility in Bankruptcy, please see: https://www.fazziolaw.com/blog/covid-19-relief-law-bankruptcy-practitioner-news.cfm

Category: COVID-19 Relief Law

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