The Small Business Administration exceeded its authority by capping Paycheck Protection Program loans at $20 million, according to lawsuits filed Monday by Accordius Health and its 47 affiliates.
As defendants, the petitions identify the SBA, Isabella Casillas Guzman in her official capacity as SBA administrator, Janet Yellen in her official capacity as Treasury Department secretary, and the United States government.
In November, according to court documents, Accordius Health affiliates were declared ineligible for PPP loans because the company as a whole had exceeded the borrowing limit. Accordius Health appealed the decision, arguing that the limit was “improper because it is not found in the CARES Act or the Economic Aid Act.”
Initially, PPP loans were restricted to a maximum of $10 million per eligible borrower.
Later, the SBA capped PPP loans that “single corporate group” enterprises could receive at $20 million.
In contrast, Accordius Health stated in its complaint that “Congress never adopted a limitation in the form of a maximum cap on the amount a so-called “corporate group” could borrow or seek forgiveness of, and did not even mention corporate groups as a category.”
The SBA’s Office of Hearings and Appeals upheld the SBA’s decision, ruling that Accordius Health affiliates are indeed part of a corporate group and subject to the $20 million borrowing cap. However, the company asserts that each Accordius Health facility is “a separate and distinct operating company from the other 47 entities for which the SBA denied loan forgiveness.”
Accordius Health affiliates are petitioning the District Court for the Western District of North Carolina, Asheville Division, to reverse the SBA’s Nov. 1 decision denying the company’s request for loan forgiveness, as well as the OHA’s March 8 and April 10 orders affirming the SBA’s decision, and, as a result, an order directing the SBA to forgive Accordius Health’s PPP loan loans.
The company also seeks reimbursement from the SBA “for all sums repaid (and that will be repaid) on the PPP loan, plus interest, in an amount to be proven, attorneys’ fees, and such other and further relief as the court may find just and proper.”
By the publication deadline, the law firm representing Accordius Health and its affiliates had not responded to a request for comment.