The Interim Final Rule issued late last week by the SBA limits the availability of PPP loans to businesses engaged in certain activities. Among them are passive landlords and developers.

Real Estate as an Eligible Business -

Paycheck Protection Program loans are only available to eligible businesses. The Interim Final Rule adopts the definition of ineligible industries generally applicable to all other 7(a) programs, which includes, among others, passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (there is an narrow exception for certain passive companies that lease to eligible small businesses). These rules, which were not included in the enabling act, appear to exclude from eligibility real estate businesses primarily engaged in owning or purchasing real estate and leasing real estate. The SBA’s guidelines exclude the following:

- Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds generally are not eligible...