20-3902(L)

Springfield Hosp., Inc., Springfield Med. Care Sys., Inc. v. Guzman

United States Court of Appeals

for the Second Circuit _____________________________________

August Term 2021

(Argued: October 28, 2021 Decided: March 16, 2022)

No. 20-3902, No. 20-3903

_____________________________________

SPRINGFIELD HOSPITAL, INC., SPRINGFIELD MEDICAL CARE SYSTEMS, INC.,

Plaintiffs-Appellees,

— v. —

ISABEL GUZMAN, IN HER CAPACITY AS ADMINISTRATOR FOR THE U.S. SMALL 

BUSINESS ADMINISTRATION,

Defendant-Appellant.

∗

_____________________________________

Before: KEARSE, LOHIER, and BIANCO, Circuit Judges.

In response to the COVID-19 pandemic, Congress enacted the Coronavirus 

Aid, Relief, and Economic Security Act (the “CARES Act” or the “Act”), which 

established the Paycheck Protection Program (“PPP”). The PPP authorized the 

∗

 Pursuant to Federal Rule of Appellate Procedure 43(c)(2), Isabel Guzman, Administrator of the 

U.S. Small Business Administration, is automatically substituted for former Administrator of the 

U.S. Small Business Administration Jovita Carranza as Defendant-Appellant.
2

Small Business Administration (the “SBA”) to guarantee favorable and potentially 

forgivable loans to businesses negatively impacted by the pandemic. In 

administering the program, the SBA decided to automatically bar any applicant 

who was a debtor in bankruptcy from receiving PPP funds. 

Plaintiffs-Appellees Springfield Hospital, Inc. and Springfield Medical Care 

Systems, Inc. (together, “Springfield”) are debtors in bankruptcy who applied for 

and were denied PPP funds solely due to their bankruptcy status. Springfield 

initiated this adversary proceeding in bankruptcy court against DefendantAppellant, the Administrator of the SBA, in her official capacity, challenging the 

SBA’s administration of PPP funds and requesting that the bankruptcy court 

enjoin the SBA from denying its PPP application on the basis of its bankruptcy 

status. Specifically, Springfield asserted that: (1) the SBA’s decision to exclude 

bankrupt debtors from obtaining PPP loans violated Section 525(a) of the 

Bankruptcy Code, which provides that “a governmental unit may not deny . . . a 

license, permit, charter, franchise, or other similar grant” to a debtor in bankruptcy 

solely because of that status, 11 U.S.C. § 525(a); and (2) the SBA is not immune 

from injunctive relief under the Small Business Act, 15 U.S.C. § 634(b)(1). 

The Bankruptcy Court for the District of Vermont (Brown, J.) held, in 

relevant part, that PPP funds were “other similar grant[s]” under Section 525(a) 

and that Section 634(b)(1) did not bar it from enjoining the SBA. The bankruptcy 

court then entered summary judgment in Springfield’s favor and enjoined the SBA 

from denying Springfield PPP funds based on their status as debtors in 

bankruptcy. The SBA appealed. We hold, based upon the plain language of 

Section 525(a), that the PPP is a loan guaranty program and not an “other similar 

grant,” and Section 525(a) does not apply to the PPP. Therefore, the bankruptcy 

court incorrectly ruled that Springfield was entitled to summary judgment and a 

permanent injunction, and we instead conclude, as a matter of law, that summary 

judgment in the SBA’s favor is warranted on the Section 525(a) claim. 

Accordingly, we REVERSE the judgment, VACATE the permanent 

injunction, and REMAND to the bankruptcy court for further proceedings 

consistent with this opinion.

JOSHUA M. SALZMAN (Mark B. Stern, 

Lindsey Powell, on the brief), Appellate 

Staff, Civil Division, for Brian M. 
3

Boynton, Acting Assistant Attorney 

General, United States Department of 

Justice, Washington, DC, and Jonathan 

A. Ophardt, Acting United States

Attorney for the District of Vermont, 

Burlington, VT, for Defendant-Appellant.

ANDREW C. HELMAN, Dentons 

Bingham Greenebaum LLP, Portland, 

ME, for Plaintiff-Appellee Springfield 

Hospital, Inc.

Adam R. Prescott, D. Sam Anderson, 

Bernstein Shur Sawyer & Nelson, P.A., 

Portland, ME, for Plaintiff-Appellee 

Springfield Medical Care Systems, Inc.

JOSEPH F. BIANCO, Circuit Judge:

In March 2020, in response to the COVID-19 pandemic, Congress enacted 

the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or the 

“Act”), which established the Paycheck Protection Program (“PPP”). The PPP 

authorized the Small Business Administration (the “SBA”) to guarantee favorable 

and potentially forgivable loans to businesses negatively impacted by the 

pandemic. In administering the program, the SBA decided to automatically bar 

any applicant who was a debtor in bankruptcy from receiving PPP funds.
4

Plaintiffs-Appellees Springfield Hospital, Inc. and Springfield Medical Care 

Systems, Inc. (together, “Springfield”)1 are debtors in bankruptcy who applied for 

and were denied PPP funds due solely to their bankruptcy status. In April 2020, 

Springfield initiated this adversary proceeding in bankruptcy court against 

Defendant-Appellant, the Administrator of the SBA, in her official capacity, 

challenging the SBA’s administration of PPP funds and requesting that the 

bankruptcy court enjoin the SBA from denying any PPP application on the sole 

basis of the applicant’s bankruptcy status. Specifically, Springfield asserted that: 

(1) the SBA’s decision to exclude bankrupt debtors from obtaining PPP loans 

violated Section 525(a) of the Bankruptcy Code, which provides that “a 

governmental unit may not deny . . . a license, permit, charter, franchise, or other 

similar grant” to a debtor in bankruptcy solely because of that status, 11 U.S.C. § 

525(a); and (2) the SBA is not immune from injunctive relief under the Small 

Business Act, 15 U.S.C. § 634(b)(1). 

1 Springfield Hospital, Inc. and Springfield Medical Care Systems, Inc. commenced separate suits, 

which were never formally consolidated in the bankruptcy court. The suits are substantially 

similar for all relevant purposes and were resolved jointly through an opinion and order crossfiled in both cases. On motion to this Court, we consolidated the two cases for appeal and we 

refer to them as a singular entity for the remainder of this opinion. 
5

On June 22, 2020, the Bankruptcy Court for the District of Vermont (Brown, 

J.) issued a Memorandum of Decision, concluding that, as a matter of law, PPP 

funds were “other similar grant[s]” under Section 525(a) and granting summary 

judgment in Springfield’s favor. Further, the bankruptcy court concluded that 

Section 634(b)(1) did not bar it from enjoining the SBA and, after determining that 

Springfield had met the standard to obtain a permanent injunction, enjoined the 

SBA from denying Springfield PPP funds based on its bankruptcy status. The SBA 

appealed.

We hold, based upon the plain language of Section 525(a), that the PPP is a 

loan guaranty program and not an “other similar grant,” and that Section 525(a) 

does not apply to PPP loans. Therefore, the bankruptcy court incorrectly ruled 

that Springfield was entitled to summary judgment and a permanent injunction, 

and we instead conclude, as a matter of law, that the SBA is entitled to summary 

judgment on the Section 525(a) claim.

Accordingly, we REVERSE the judgment, VACATE the permanent 

injunction, and REMAND to the bankruptcy court for further proceedings 

consistent with this opinion. 
6

BACKGROUND

I. Statutory and Regulatory Background

A. Pre-CARES Act Statutory Context

The SBA was enacted in 1958 to “aid, counsel, assist, and protect, insofar as 

is possible, the interests of small-business concerns.” Pub. L. No. 85-536, 72 Stat. 

384 (1958) (codified as amended at 15 U.S.C. § 631(a), et seq.); see also 15 U.S.C. 

§ 633(a) (establishing the SBA). The SBA’s primary mechanism for aiding small

businesses is by financing private “Section 7(a) loans” under the Small Business 

Act. See 15 U.S.C. § 636(a). Although the SBA guarantees these loans, they are

typically issued by private lenders rather than through direct disbursals from the

SBA. Id.; United States v. Kimbell Foods, Inc., 440 U.S. 715, 719 n.3 (1979). By statute, 

Section 7(a) loans are subject to a “sound value” requirement—namely, that “[a]ll

loans made under [Section 7(a)] shall be of such sound value or so secured as 

reasonably to assure repayment[.]” 15 U.S.C. § 636(a)(6).

In addition to creating Section 7(a) loans, the Small Business Act authorizes 

the SBA Administrator to “make such rules and regulations as [s]he deems 

necessary” to implement the loan program. See 15 U.S.C. § 634(b)(6); id. § 634(b)(7) 

(vesting the SBA Administrator with the authority to create rules and “take any 
7

and all actions . . . when [s]he determines such actions are necessary or desirable 

in making, servicing, . . . or otherwise dealing with or realizing on loans made 

under the provisions of [the Act]”). Accordingly, the SBA has promulgated 

several rules to ensure that Section 7(a) loans, consistent with the “sound value” 

mandate, are sufficiently creditworthy and assured of repayment. See, e.g., 13 

C.F.R. § 120.150 (2022). In evaluating creditworthiness, the SBA considers various 

factors, including the “credit history of the applicant,” the “[s]trength of the 

business,” its “projected cash flow,” and the applicant’s “[a]bility to repay the loan 

with earnings from the business.“ Id. § 120.150(a)–(i). Additionally, as part of the 

creditworthiness inquiry, the SBA considers the bankruptcy status and history of 

each applicant, although a status or history of bankruptcy does not automatically 

render an applicant ineligible for a Section 7(a) loan. See SMALL BUS. ADMIN., SBA

7A BORROWER INFORMATION FORM 1919,

https://www.sba.gov/sites/default/files/2021-12/Form%201919_10-21-2020-rev1_lt-508.pdf; see also Standard Operating Procedure, § 50 10 5(K), Small Bus. 

Admin., Lender and Development Company Loan Programs 178–80 (Apr. 1, 2019), 

https://www.sba.gov/sites/default/files/2019-

02/SOP%2050%2010%205%28K%29%20FINAL%202.15.19%20SECURED%20copy
8

%20paste.pdf (outlining capital underwriting and capital analysis requirements 

for Section 7(a) loans).

B. COVID-19 and the CARES Act

In March 2020, in response to the COVID-19 pandemic, Congress enacted 

the CARES Act to, in part, alleviate the pandemic’s substantial economic effects on 

small businesses. See Coronavirus Aid, Relief, and Economic Security Act, Pub L. 

No. 116-136, 134 Stat. 281, 286 (2020). Relevant here, Section 1102 of the Act 

establishes the PPP, a temporary program targeted at providing small businesses 

with the funds necessary to meet their payroll and operating expenses and 

therefore keep workers employed. See CARES Act § 1102, 134 Stat. at 286 (codified 

as amended at 15 U.S.C. § 636(a)(36)). The PPP provides potentially forgivable 

loans to eligible small businesses, allowing the recipient to seek loan forgiveness 

if at least 60% of the loaned funds are used for specified expenses, such as payroll. 

See id. § 636(a)(36); id. § 636m(b)–(d). However, unauthorized uses of PPP funds, 

as well as certain authorized uses, are ineligible for loan forgiveness. Compare id.

§ 636(a)(36)(F) (detailing authorized uses), with id. § 636m(b) (detailing 

forgiveness-eligible uses). Congress initially authorized $349 billion in PPP loan 

commitments, but, after those funds were quickly depleted, added another $310 
9

billion one month later and eventually extended a third round of PPP funding at 

the end of 2020. See CARES Act § 1102(b), 134 Stat. at 293; Paycheck Protection

Program and Health Care Enhancement Act, Pub. L. No. 116-139, § 101(a)(1), 134 

Stat. 620, 620 (2020); see Consolidated Appropriations Act, 2021, Pub. L. No. 116-

260, § 311, 134 Stat. 1182, 2001–07 (2020).

Rather than establishing the PPP as a standalone program, the CARES Act 

places the PPP under Section 7(a) of the Small Business Act, providing that the 

SBA “may guarantee covered [PPP] loans under the same terms, conditions, and 

processes” as other Section 7(a) loans.2 15 U.S.C. § 636(a)(36)(B); see CARES Act 

§ 1102, 134 Stat. at 286 (amending “Section 7(a) of the Small Business Act”);

Pharaohs GC, Inc. v. U.S. Small Bus. Admin., 990 F.3d 217, 224 (2d Cir. 2021) 

(acknowledging the PPP’s placement under Section 7(a)). The Act relaxed many 

of the Section 7(a) eligibility criteria for PPP applicants and waived some of the 

standard Section 7(a) requirements altogether. 15 U.S.C. §§ 636(a)(36)(D), (H)–(J), 

2 This was not an unusual framework for Congress to adopt, as it has, on multiple occasions, 

created specialized Section 7(a) loan programs and has modified or eliminated the standard 

Section 7(a) requirements for those loans. See, e.g., Small Business Reauthorization and 

Manufacturing Assistance Act of 2004, Pub. L. No. 108-447, § 101(a), 118 Stat. 3441, 3442 (codified 

as amended at 15 U.S.C. § 636(a)(31)) (creating an express loan program and limiting the 

maximum loan amount to $500,000); Military Reservist and Veteran Small Business 

Reauthorization and Opportunity Act of 2008, Pub. L. No. 110-186, § 208, 122 Stat. 623, 631

(codified as amended at 15 U.S.C. § 636(a)(33)) (creating the increased veteran participation 

program and reducing the fees on veteran participation loans by 50%).
10

(R). However, the Act did not exempt PPP loans from Section 7(a)’s statutory 

“sound value” requirement.3 Id. § 636(a)(6).

Given the need to move expeditiously to address the pandemic’s economic 

effects, the CARES Act directed the SBA to issue emergency regulations 

implementing the PPP within only fifteen days.4 CARES Act § 1114, 134 Stat. at 

312 (codified as amended at 15 U.S.C. § 9012). In keeping with this statutory 

mandate, the SBA issued multiple rules implementing the PPP. The SBA’s first 

interim final rule, which noted that “[t]he intent of the [CARES] Act is that SBA 

provide relief to America’s small businesses expeditiously . . . by . . . streamlining 

the requirements of the regular 7(a) loan program,” waived the standard Section 

7(a) creditworthiness inquiry and full underwriting requirements for PPP loans.5 

See Business Loan Program Temporary Changes; Paycheck Protection Program, 85

Fed. Reg. 20,811, 20,811–12, 20,815 (Small Bus. Admin. Apr. 15, 2020) (waiving the 

3 PPP loans also share many other features with standard Section 7(a) loans, including, for 

instance, allowing borrowers to apply to and obtain PPP loans from private lending institutions, 

which then issue their own funds to qualifying borrowers, guaranteed by the SBA. See, e.g., 15 

U.S.C. § 636(a)(36)(F)(ii). 

4 To accomplish this expeditiously, Congress exempted the SBA from the standard rulemaking 

notice requirements. See CARES Act § 1114, 134 Stat. at 312 (codified as amended at 15 U.S.C. §

9012). 

5

 Among other procedures, the SBA also established that PPP applicants must apply through 

approved lenders and that PPP funds are distributed on a “first-come, first-served” basis until 

the allocated funds are exhausted. See 85 Fed. Reg. at 20,812–13.
11

normal Section 7(a) criteria under 13 C.F.R. § 120.150); see also Business Loan 

Program Temporary Changes; Paycheck Protection Program—Additional 

Eligibility Criteria and Requirements for Certain Pledges of Loans, 85 Fed. Reg. 

21,747, 21,750 (Small Bus. Admin. Apr. 20, 2020) (describing the lack of 

underwriting requirements for the PPP). However, the SBA took other steps to 

follow its statutory “sound value” mandate, such as requiring that borrowers sign 

promissory notes specifying set interest rates and outlining key repayment terms.

See 85 Fed. Reg. at 20,813 (establishing 1% interest rates and two-year maturation 

dates for PPP loans); see 85 Fed. Reg. at 20,814 (clarifying that “[i]f you use PPP 

funds for unauthorized purposes, SBA will direct you to repay those amounts”); 

see Business Loan Program Temporary Changes; Paycheck Protection Program—

Requirements—Promissory Notes, Authorizations, Affiliation, and Eligibility, 85 

Fed. Reg. 23,450, 23,450–52 (outlining promissory notes requirements) (Small Bus. 

Admin. Apr. 28, 2020).

Moreover, although the first interim final rule did not specify that all 

bankruptcy debtors were ineligible to receive PPP funds, it established the use of 

the PPP Application form, which asks applicants whether they are “presently 

involved in any bankruptcy” and provides that, if the applicant’s answer is “’Yes,’ 
12

the loan will not be approved.” SMALL BUS. ADMIN, PAYCHECK PROTECTION 

PROGRAM BORROWER APPLICATION FORM 2483 (VERSION 1),

https://www.sba.gov/sites/default/files/2022-02/PPP-Borrower-ApplicationForm-Fillable.pdf; see 85 Fed. Reg. at 20,814 (establishing use of SBA Form 2483). 

In its fourth interim final rule, the SBA explicitly clarified that bankruptcy debtors 

are ineligible to receive PPP funds, explaining that “[t]he Administrator, in 

consultation with the Secretary [of the Treasury], determined that providing PPP 

loans to debtors in bankruptcy would present an unacceptably high risk of an 

unauthorized use of funds or non-repayment of unforgiven loans.” See 85 Fed. 

Reg. at 23,451.

II. Procedural History

Springfield is a non-profit critical access hospital and medical services 

provider located in Springfield, Vermont, that employs over 670 employees. On

June 26, 2019, Springfield commenced voluntary chapter 11 bankruptcy 

proceedings, but has continued to operate its businesses as a debtor-in-possession. 

After the onset of the COVID-19 pandemic, the majority of Springfield’s outpatient 

procedures, non-essential medical procedures, and office visits were cancelled, 

postponed, or rescheduled pursuant to federal and state orders and 
13

recommendations. As a significant portion of Springfield’s revenue streams are 

derived from these services, the cancellations and postponements had a severe 

impact on Springfield’s cash flow, materially exacerbating Springfield’s alreadyexisting financial problems. Due to this negative impact on its income, Springfield 

anticipated serious difficulties with paying its near-term operating expenses and

consequently applied for multiple state and federal emergency grants, including, 

as relevant here, PPP loans.6 At the time of its application, Springfield was in 

chapter 11 bankruptcy status. Because of this status, Springfield’s PPP 

applications were denied.7 

On April 27, 2020, Springfield filed suit in bankruptcy court in the District 

of Vermont against the SBA Administrator in her official capacity, alleging, inter 

6 Between April and May 2020, Springfield received approximately $5.6 million in federal 

stimulus funds for rural healthcare providers and borrowed approximately $498,800 in 

prospective Medicaid payments from the State of Vermont. Further, in May 2020, Springfield 

was informed it would receive a grant of approximately $531,000 from the federal government to 

expand its testing capabilities for COVID-19. By the time of the bankruptcy court’s decision, these 

funds had mitigated Springfield’s immediate risk of having to close the hospital and medical care 

centers, though Springfield’s counsel represented at oral argument that the hospital system had 

to discontinue dental services in certain areas due to budget shortfalls. See Oral Arg. at 23:50–

24:01.

7 Springfield applied for PPP funds from private commercial lenders Berkshire Bank and 

Mascoma, both of which denied Springfield’s applications on April 13, 2020 and April 30, 2020, 

respectively. Although the SBA’s interim fourth rule had not been released at this time, the 

application denials were based upon SBA Form 2483 and additional guidance from the SBA. 

Neither party disputes that Springfield’s applications were denied solely because of its status as 

a debtor in bankruptcy. 
14

alia, that the SBA’s administration of the PPP discriminated against Springfield in 

violation of Section 525(a) of the Bankruptcy Code, and seeking an order 

“enjoining SBA . . . from denying an application under PPP on the basis that the 

applicant is a debtor in bankruptcy.”8 Joint App’x at 18–23. In opposition, the SBA

argued that (1) the PPP was a loan program not covered under Section 525(a), and 

(2) Springfield was unable to obtain injunctive relief due to SBA’s sovereign 

immunity pursuant to Section 634(b)(1), which provides that “no attachment, 

injunction, garnishment, or other similar process, mesne or final, shall be issued 

against the [SBA] Administrator or [her] property.” 15 U.S.C. § 634(b)(1). After 

an emergency hearing, the bankruptcy court granted Springfield a temporary 

restraining order, which was later extended through the duration of the 

proceedings. Because the parties agreed there were no material facts in dispute 

with respect to the Section 525(a) claim asserted by Springfield, the bankruptcy 

court bifurcated the proceedings and directed the parties to proceed with briefing 

their motion for summary judgment on the Section 525(a) claim. 

8 In addition to its Section 525(a) claim and its request for injunctive relief to bar the SBA from 

denying its PPP application on the basis of its bankruptcy status, Springfield also sought: (1) 

declaratory relief that the “CARES Act requires its Application to be considered on the same 

terms as other qualified businesses that are not presently debtors”; (2) a writ of mandamus 

against the SBA Administrator to implement the PPP in a way that does not violate Section 525(a); 

and (3) damages in the event that injunctive relief is not granted and “it is later determined that 

[Springfield] was eligible for PPP funds but none remain available.” Joint App’x at 18–23. 
15

On June 22, 2020, the bankruptcy court issued an order and accompanying 

Memorandum of Decision granting summary judgment in Springfield’s favor and 

enjoining the SBA from denying Springfield’s PPP application.9 Specifically, the 

bankruptcy court held that: (1) In re Goldrich, 771 F.2d 28 (2d Cir. 1985)—the 

controlling precedent cited by the SBA, which held that Section 525(a) did not 

protect extensions of credit—had been overruled by congressional abrogation and 

a later circuit decision; (2) regardless, the PPP was an “other similar grant” within 

the meaning of Section 525(a), not a loan program, and thus, the SBA’s exclusion 

of debtors in bankruptcy from the PPP violated Section 525(a); (3) Section 634(b)(1) 

did not bar an injunction against the SBA and, accordingly, the bankruptcy court

could enjoin the SBA from taking any action that would violate Section 525(a); and 

(4) Springfield had met the necessary standard to obtain a permanent injunction.

9 The bankruptcy court issued a detailed permanent injunction that not only enjoined the SBA 

(and the relevant participating commercial lenders) from denying Springfield’s PPP application,

but also required that the enjoined parties treat May 15, 2020 as the date on which Springfield 

received the PPP funds and as the start of the “covered period,” as defined under the CARES Act, 

even though Springfield would not actually receive any PPP funds until a later date. The 

injunction also specified that Springfield would submit its PPP forgiveness applications at the 

end of the covered period, clarifying that “[t]his fictional approval date is necessary to protect the 

rights of the Enjoined Parties and is consistent with the stay of certain crucial deadlines.” Special 

App’x at 40. The bankruptcy court further outlined that “[u]pon entry of a final order . . . that is 

not subject to further appeal . . . the Enjoined Parties shall promptly disburse the PPP funds to 

Plaintiffs.” Special App’x at 41.
16

This appeal followed.10 

III. PPP Litigation under Section 525(a) in Other Courts

Around the same time as the instant action, numerous challenges to the 

SBA’s exclusion of bankrupt debtors from the PPP were brought in federal courts 

around the country. When the bankruptcy court issued its order that is the subject 

of the instant appeal, it identified multiple recent PPP-related decisions addressing 

Section 525(a) in both bankruptcy courts and district courts.11 Of the proceedings 

that reached a decision by the time the bankruptcy court issued its order, at least 

fourteen courts had concluded—either directly or by determining that the 

plaintiffs were unlikely to succeed on the merits—that the PPP was not covered 

10 After the bankruptcy court issued its order, the SBA sought to have the decision reviewed by 

the district court in the first instance. However, on July 31, 2020, in response to Springfield’s 

request, the bankruptcy court entered an order certifying its decision for direct appeal to this 

Court pursuant to 28 U.S.C. § 158(d)(2), which permits direct appeal of a bankruptcy court order 

or judgment to the appropriate court of appeals, providing the court of appeals permits, “if the 

bankruptcy court certifies that either ‘(i) the judgment, order, or decree involves a question of law 

as to which there is no controlling decision . . . or involves a matter of public importance; (ii) the 

judgment, order, or decree involves a question of law requiring resolution of conflicting 

decisions; or (iii) an immediate appeal from the judgment, order, or decree may materially

advance the progress of the case.” Weber v. United States Tr., 484 F.3d 154, 157 (2d Cir. 2007) 

(quoting 28 U.S.C. § 158(d)(2)(A)(i)–(iii)). On November 19, 2020, we concluded that the 

bankruptcy court’s order satisfied Section 158(d)(2) and authorized this appeal. 

11 Although the bankruptcy court referenced thirty-four PPP-related cases, we reference only the 

cases that decided the Section 525(a) issue, as some cases were voluntarily dismissed and many 

were decided on, inter alia, claims brought under the Administrative Procedure Act (“APA”). 
17

by Section 525(a).12 We note that one such case was brought in the Western District 

of New York. The district court ultimately granted summary judgment to the SBA 

on the Section 525(a) claim and thus created a split of authority among lower 

courts within this circuit. See Diocese of Rochester, 466 F. Supp. 3d at 379–80

(holding that the PPP was a “loan” not covered by Section 525(a)). In contrast, six

courts concluded that Section 525(a) did extend to the PPP.13 Since the bankruptcy 

12 Cosi, Inc. v. U.S. Small Bus. Admin., Adv. Proc. No. 20-50591 (BLS) (Bankr. D. Del. April 30, 2020); 

Trudy’s Texas Star, Inc. v. Carranza, Adv. Proc. No. 20-ap-01026-hcm (Bankr. W.D. Tex. May 7, 

2020); Breda, LLC v. Carranza, Adv. Proc. No. 20-ap-01008 (Bankr. D. Me. May 11, 2020); Asteria 

Educ., Inc. v. Carranza, Adv. Proc. No. 20-ap-05024-cag (Bankr. W.D. Tex. May 14, 2020); Weather 

King Heating & Air, Inc. v. U.S. Small Bus. Admin., Adv. Proc. No. 20-ap-05023-amk (Bankr. N.D. 

Ohio May 21, 2020); Schuessler v. U.S. Small Bus. Admin, Adv. Proc. No. 20-02065-bhl, 2020 WL 

2621186, at *9 (Bankr. E.D. Wi. May 22, 2020); Starplex Corp. v. Carranza, Adv. Proc. No. 20-ap00095-DPC (Bankr. D. Ariz. May 26, 2020); Matter of Henry Anesthesia Assocs. LLC, Adv. Proc. No. 

20-06084-LRC, 2020 WL 3002124, at *5–6 (Bankr. N.D. Ga. June 4, 2020); iThrive Health, LLC v. 

Carranza, 623 B.R. 392, 401–02 (Bankr. D. Md. 2020); Diocese of Rochester v. U.S. Small Bus. Admin, 

466 F. Supp. 3d 363, 370 (W.D.N.Y. 2020); USA Gymnastics v. U.S. Small Bus. Admin., Adv. Proc. 

No. 20-ap-50055 (Bankr. S.D. Ind. June 12, 2020), aff’d 2020 WL 4932233, at *1–2 (S.D. Ind. June 22, 

2020); PCT Int’l, Inc. v. U.S. Small Bus. Admin., Adv. Proc. No. 20-ap-00118-PS (Bankr. D. Ariz. 

June 12, 2020); Fox Valley Pro Basketball, Inc. v. U.S. Small Bus. Admin., Case No. 20-C-793, 2020 U.S. 

Dist. LEXIS 105355, at *2 (E.D. Wi. June 16, 2020); In re Penobscot Valley Hosp., Adv. Proc. No. 20-

1005, 2020 WL 3032939, at *10–16 (Bankr. D. Me. June 3, 2020), adopted in part, 620 B.R. 1 (D. Me. 

2020).

13 In re Hidalgo Cty. Emergency Serv. Found., Adv. Proc. No. 20-2006, 2020 WL 2029252, at *1 (Bankr. 

S. D. Tex. Apr. 25, 2020), rev’d 962 F.3d 838 (5th Cir. 2020); In re Organic Power LLC, 619 B.R. 540, 

550 (Bankr. D. P.R. 2020); KP Eng’g LP v. U.S. Small Bus. Admin., Adv. Proc. No. 20-ap-03120 

(Bankr. S.D. Tex. May 18, 2020) (preliminary injunction entered on May 18, 2020, adversary 

proceeding dismissed as moot by agreement of the parties on June 30, 2020); St. Alexius Hosp. 

Corp. #1 v. Carranza, Adv. Proc. No. 20-ap-06005-grs (Bankr. E.D. Ky. May 22, 2020) (subsequently 

voluntarily dismissed without prejudice); Roman Catholic Church of the Archdiocese of Santa Fe v. 

U.S. Small Bus. Admin., 615 B.R. 644, 656–57 (Bankr. D. N.M. 2020); In re Skefos, Adv. Proc. No. 20-

00071, 2020 WL 2893413, at *16 (Bankr. W.D. Tenn. June 3, 2020). One such decision was later 
18

court’s decision here, at least four additional courts have determined that Section 

525(a) does not apply to the PPP, while no additional courts have determined that 

it does.14

In sum, at the time of this opinion’s publication, approximately eighteen

courts have determined that the PPP is not protected by Section 525(a). No circuit 

court, however, has addressed this precise issue.

IV. Post-CARES Act Congressional Action

On December 27, 2020, Congress enacted the Consolidated Appropriations 

Act 2021, Pub L. No. 116-260, 134 Stat. 1182 (2020). As relevant here, the 

Consolidated Appropriations Act amended Section 525 to prohibit the exclusion 

of debtors in bankruptcy from certain benefits under the CARES ACT—namely, 

foreclosure moratoriums, eviction moratoriums, and the forbearance of some 

residential mortgages—solely based on their status as debtors in bankruptcy. See 

reversed on grounds other than the Section 525(a) claim. See In re Hidalgo Cty. Emergency Serv.

Found., 962 F.3d at 840–41 (reversing the bankruptcy court on the grounds that, per Fifth Circuit 

precedent, the SBA had sovereign immunity from injunctive relief under Section 634(b)(1), and 

thus had been improperly enjoined). 

14 See In re Dancor Transit, No. Case No. 2:20-bk-70536, 2020 WL 4730896, at *7–8 (Bankr. W.D. 

Ark. June 22, 2020); Tradeways, Ltd. v. U.S. Dep’t of the Treasury, Case No. ELH-20-1324, 2020 WL 

3447767, at *16 (D. Md. June 24, 2020); In re Vestavia Hills, Ltd., 630 B.R. 816, 848–49 (S.D. Cal. 2021); 

Archbishop of Agaña v. U.S. Small Bus. Admin, Adv. Proc. No. 20-00002, 2021 WL 1702311, at *8 (D. 

Guam Feb. 23, 2021).
19

11 U.S.C. § 525(d) (“A person may not be denied relief under sections 4022 through 

4024 of the CARES Act (15 U.S.C. 9056, 9057, 9058) because the person is or has 

been a debtor under this title.”). Notably, this amendment did not include PPP in 

the list of covered benefits, nor did it alter the text of Section 525(a). Additionally, 

the Consolidated Appropriations Act included provisions continuing the PPP 

through the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues 

Act (“Economic Aid Act”), which extended the SBA’s authority to make PPP loans 

through March 31, 2021, and provided a mechanism for certain bankrupt debtors 

to seek and obtain approval for PPP loans.15 See Pub. L. No. 116-260, div. N, tit. 

III, 134 Stat. at 1993 (Economic Aid Act), 2019 (extension to March 31). Springfield 

does not argue that it could qualify for PPP loans under the Economic Aid Act. 

DISCUSSION

On appeal, the SBA contends that the bankruptcy court erred in concluding 

that Section 525(a) applied to the PPP. Specifically, the SBA asserts that our 

precedent in Goldrich establishes that extensions of credit are not protected by

Section 525(a) and argues that the bankruptcy court erred by (1) reasoning that 

15 Section 320 of the Economic Aid Act empowers bankruptcy courts to, effective only upon 

approval of the SBA Administrator, authorize debtors under specific categories of bankruptcy to 

obtain a PPP loan. Economic Aid Act §§ 320, 320(f), Title III of Div. N of Pub. L. No. 116-260, 134 

Stat. 1182, 2015–16 (2020).
20

Goldrich was no longer viable precedent, and (2) concluding that the PPP was a 

grant program covered under Section 525(a), not an uncovered loan guarantee 

program. Additionally, the SBA contends that the bankruptcy court lacked 

authority to enjoin the SBA’s policy because of the injunction bar in Section 

634(b)(1). 

We review de novo a bankruptcy court’s grant of summary judgment. See In 

re Treco, 240 F.3d 148, 155 (2d Cir. 2001). A motion for summary judgment may be 

granted only “if the movant shows that there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 

Civ. P. 56(a); In re Dana Corp., 574 F.3d 129, 151 (2d Cir. 2009). Where the grant of 

summary judgment “presents only a legal issue of statutory interpretation . . . we 

review de novo whether the district court correctly interpreted the statute.” 

Hayward v. IBI Armored Servs., Inc., 954 F.3d 573, 575 (2d Cir. 2020) (internal 

quotation marks omitted).

Moreover, when reviewing an order granting a permanent injunction, we 

review the lower court’s conclusions of law de novo and its ultimate decision for 

abuse of discretion. Goldman, Sachs & Co v. Golden Empire Schs. Fin. Auth., 764 F.3d 

210, 214 (2d Cir. 2014). An abuse of discretion occurs when the lower court’s 
21

decision rests on a clearly erroneous factual finding or an error of law or cannot be 

located within the range of permissible decisions. ACORN v. United States, 618 

F.3d 125, 133 (2d Cir. 2010). 

As discussed below, we hold that, as a matter of law, the PPP is a loan 

guaranty program and not an “other similar grant,” and thus is not covered by 

Section 525(a). Accordingly, the bankruptcy court erred in interpreting the statute 

and granting summary judgment in Springfield’s favor on the Section 525(a) claim. 

Instead, we conclude, as a matter of law, that the SBA is entitled to summary 

judgment on the Section 525(a) claim. Moreover, because we conclude that 

Springfield’s claim fails on the merits, we vacate the permanent injunction and 

decline to address whether the SBA has sovereign immunity from injunctive relief 

under Section 634(b)(1).16 

16 The SBA argues that the plain terms of the statute bar all injunctive relief against it, whereas 

Springfield argues that the SBA’s reading is too narrow and disregards the context of the 

surrounding terms in the provision. Our sister circuits are split on Section 634(b)(1)’s reach. 

Compare Ulstein Maritime, Ltd. v. United States, 833 F.2d 1052, 1057 (1st Cir. 1987) (holding that 

Section 634(b)(1) does not immunize the SBA from injunctions barring “agency actions that 

exceed agency authority,” as long as the injunction “would not interfere with internal agency 

operations”), with Enplanar, Inc. v. Marsh, 11 F.3d 1284, 1290 n.6 (5th Cir. 1994) (“[A]ll injunctive 

relief directed at the SBA is absolutely prohibited.” (internal quotation marks omitted)), and J.C. 

Driskill, Inc. v. Abdnor, 901 F.2d 383, 386 (4th Cir. 1990) (“[C]ourts have no jurisdiction to award 

injunctive relief against the SBA.”). We have not yet addressed this issue and decline to do so 

here. 
22

I. Sovereign Immunity and Injunctive Relief

Before we analyze Springfield’s Section 525(a) claim, we must briefly 

address whether there is a threshold question of federal sovereign immunity, 

relating to the availability of injunctive relief in this case, that we must first 

consider before reaching the merits of the case.

Issues of federal sovereign immunity implicate a court’s subject-matter 

jurisdiction, see Hamm v. United States, 483 F.3d 135, 137 (2d Cir. 2007), and, as such,

are usually threshold issues that must be decided before proceeding to the merits 

of a given case, see Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–02 (1998). 

However, as we have frequently held, there is a distinct difference between 

jurisdictional questions of a statutory nature and jurisdictional questions of a 

constitutional nature. See, e.g., Butcher v. Wendt, 975 F.3d 236, 242 (2d Cir. 2020) 

(describing Steel Co.’s differentiation between constitutional and statutory 

jurisdiction and explaining that “[t]he bar on hypothetical jurisdiction, we have 

held, applies only to questions of Article III jurisdiction” (internal quotation marks 

omitted)). When a jurisdictional issue is statutory in nature, we are not required 

to follow a strict order of operations but instead may proceed to dismiss the case 

on the merits rather than engage with the jurisdictional question, particularly 
23

when the jurisdictional issue is complex and the merits are straightforward. See, 

e.g., id. (collecting cases); Conyers v. Rossides, 558 F.3d 137, 150 (2d Cir. 2009) 

(declining to decide a question of federal sovereign immunity where “the question 

[was] one of statutory rather than constitutional jurisdiction” and instead, 

“assum[ing] hypothetical jurisdiction” and “proceed[ing] to address the 

alternative argument for dismissal offered”); Ivanishvili v. U.S. Dep’t of Just., 433 

F.3d 332, 338 n.2 (2d Cir. 2006) (“Our assumption of jurisdiction to consider first 

the merits is not barred where the jurisdictional constraints are imposed by statute, 

not the Constitution, and where the jurisdictional issues are complex and the 

substance of the claim is, as here, plainly without merit.”).

Moreover, federal sovereign immunity differs from standard threshold 

matters of Article III jurisdiction in that it can be consented to or waived. See 

F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) (“Absent a waiver, sovereign immunity 

shields the Federal Government and its agencies from suit.” (emphasis added)); cf. 

Wisconsin Dep’t of Corr. v. Schacht, 524 U.S. 381, 389 (1998) (“[T]he Eleventh 

Amendment grants the State a legal power to assert a sovereign immunity defense 

should it choose to do so. The State can waive the defense. Nor need a court raise 

the defect on its own. Unless the State raises the matter, a court can ignore it.” 
24

(internal citations omitted)). Other circuits have held that a court is not required 

to decide the issue of federal sovereign immunity before reaching the merits. See, 

e.g., In re Gateway Radiology Consultants, P.A., 983 F.3d 1239, 1255 n.7 (11th Cir. 

2020); In re Sealed Case No. 99-3091, 192 F.3d 995, 1000–01 (D.C. Cir. 1999). But see 

In re Hidalgo Cty. Emergency Serv. Found., 962 F.3d at 840–41 (concluding that the 

bankruptcy court “exceeded its authority” under “well-established Fifth Circuit 

law,” and vacating the preliminary injunction against the SBA). 

Here, we similarly conclude that the question of the SBA’s sovereign 

immunity under Section 634(b)(1), related to the issue of the availability of 

injunctive relief, is not a threshold question we must decide before holding that 

the Section 525(a) claim fails on the merits. First, it is clear to us that we have

jurisdiction over the merits of the underlying dispute. Section 106 of the 

Bankruptcy Code—entitled “Waiver of sovereign immunity”—expressly 

abrogates sovereign immunity with respect to Section 525, among other

provisions, and provides that a “court may hear and determine any issue arising 

with respect to the application of such sections to governmental units.” 11 U.S.C. 

§ 106(a)(1)–(2); see F.A.A. v. Cooper, 566 U.S. 284, 290 (2012) (“[A] waiver of 

sovereign immunity must be unequivocally expressed in statutory text.” (internal 
25

quotation marks omitted)). Further, Section 634(b)(1)’s own text provides that 

“[t]he [SBA] may . . . sue and be sued . . . in any United States district court.” 15 

U.S.C. § 634(b)(1). 

Thus, the SBA has not asserted immunity from suit. Instead, the SBA 

concedes that the Bankruptcy Code waives its sovereign immunity, albeit in a 

limited fashion, and agrees that the question of its immunity from injunctive relief 

under Section 634(b)(1) is not a threshold issue that we must decide before we 

reach the merits. In other words, the SBA is not asserting sovereign immunity as 

a defense against suit—it is merely raising sovereign immunity as a defense 

against one particular form of relief.17 As such, we do not view the Section 634(b)(1)

17 The SBA’s litigation position appears to be what some circuits have termed a “conditional” 

assertion of sovereign immunity—essentially, when a state or federal governmental unit waives 

sovereign immunity as to the greater lawsuit but reserves the right to raise immunity as a defense 

if it loses on the merits. See McClendon v. Ga. Dep’t of Comm. Health, 261 F.3d 1252, 1258 (11th Cir. 

2001). Conditional assertions of immunity, essentially a jurisdictional argument in the 

alternative, have led some courts to conclude that there is no need to decide the jurisdictional 

question before reaching the merits. See, e.g., Silberman v. Miami Dade Transit, 927 F.3d 1123, 1137 

(11th Cir. 2019) (“Because sovereign immunity can be waived, our precedent allows us to ‘bypass’ 

the threshold question whether an entity is entitled to sovereign immunity where it only 

conditionally asserts the defense.” (internal quotation marks and alterations omitted)); Floyd v. 

Thompson, 227 F.3d 1029, 1035 (7th Cir. 2000) (concluding the court could bypass a complex 

Eleventh Amendment issue because “the Eleventh Amendment occupies its own unique 

territory” and “[u]nlike basic subject matter jurisdiction, which can never be stipulated or waived, 

a state is entitled to waive its Eleventh Amendment immunity from suit if it so desires”); cf. Parella 

v. Ret. Bd. of R.I. Emps.’ Ret. Sys., 173 F.3d 46, 55 (1st Cir. 1999) (“[B]ecause Eleventh Amendment 

immunity can be waived, the presence of an Eleventh Amendment issue does not threaten the 
26

question of whether an injunction can be issued against the SBA as a threshold 

question that we must decide before we even determine whether an injunction 

should be issued against the SBA. This is especially true where, as here, the 

plaintiffs seek other forms of relief, such as damages and declaratory relief, as to 

which no sovereign immunity issue exists. To hold otherwise would require a 

court to decide a statutory jurisdictional issue related only to one particular form 

of relief being sought even before deciding whether the party is entitled to any 

relief at all. We see no legal basis to impose such a stringent requirement here and,

accordingly, proceed to discuss the merits of the Section 525(a) claim.18

court’s underlying power to declare the law.”). But see United States v. Tx. Tech Univ., 171 F.3d 

279, 285–86 (5th Cir. 1999) (“It is the Eleventh Amendment’s restraint on ‘Judicial power’ that 

requires us to confront the Eleventh Amendment before employing our power to interpret 

statutory text.”).

18 Moreover, in the near-analogous Eleventh Amendment context, we have similarly declined to 

engage in a complex jurisdictional analysis when a straightforward basis of decision was 

available, thereby avoiding unnecessary issues. See, e.g., Donohue v. Cuomo, 980 F.3d 53, 77 n.15 

(2d Cir. 2020); Nat’l R.R. Passenger Corp. v. McDonald, 779 F.3d 97, 100 (2d Cir. 2015); Ret. Sys. of 

Ala. v. J.P. Morgan Chase & Co., 386 F.3d 419, 431 (2d Cir. 2004); Tyler v. Douglas, 280 F.3d 116, 121 

(2d Cir. 2001). To be sure, on at least one other occasion, we insisted upon examining the 

immunity question before reaching the merits of the claim. See Hale v. Mann, 219 F.3d 61, 66–67 

(2d Cir. 2000). However, in that instance, the state entity in question asserted sovereign immunity 

from suit entirely, contending that Congress had not validly abrogated the state’s sovereign 

immunity with the Family Medical Leave Act. Id. at 66–69. Here, in contrast, the SBA does not 

contend that it is immune in general, merely that it is immune from injunctive relief. 
27

II. Section 525(a)

To establish a violation of Section 525(a), Springfield must demonstrate that:

(1) the SBA is a governmental unit; (2) the PPP is covered by the statute; and (3)

the SBA discriminated against Springfield solely because of its status as a debtor 

in bankruptcy. 11 U.S.C. § 525(a). As the SBA is unquestionably a governmental 

unit as defined in Title 11,19 and as the parties do not dispute that Springfield was

excluded from the PPP solely based upon its bankruptcy status, the only question 

before us is whether, as a matter of law, the PPP is a “license, permit, charter, 

franchise, or other similar grant” covered under Section 525(a). We conclude that 

it is not. As set forth below, our conclusion is supported by the plain text of the 

statute, our prior precedent, and subsequent congressional action after the passage 

of the CARES Act.

A. The Text of Section 525(a)

Our analysis begins, as it must, with the plain text of Section 525(a). See 

Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254 (1992) (“When the words of a statute 

are unambiguous, then . . . [the] ‘judicial inquiry is complete.’” (quoting Rubin v. 

19 The Bankruptcy Code defines a “governmental unit” as “[the] United States; State; 

Commonwealth; District; Territory; municipality; foreign state; department, agency, or 

instrumentality of the United States (but not a United States trustee while serving as a trustee in 

a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a 

foreign state; or other foreign or domestic government.” 11 U.S.C. § 101(27).
28

United States, 449 U.S. 424, 430 (1981))); United States v. Gayle, 342 F.3d 89, 92 (2d 

Cir. 2003) (“Statutory construction begins with the plain text and, if that text is 

unambiguous, it usually ends there as well.”). In looking at a statute’s plain 

meaning, we also must consider the context in which the statutory terms are used, 

as “[w]e do not . . . construe statutory phrases in isolation; we read statutes as a 

whole.” United States v. Morton, 467 U.S. 822, 828 (1984); Saks v. Franklin Covey

Co., 316 F.3d 337, 345 (2d Cir. 2003) (“The text’s plain meaning can best be 

understood by looking to the statutory scheme as a whole and placing the 

particular provision within the context of that statute.”). 

The meaning of Section 525(a) is plain. Section 525(a) provides, in relevant 

part, that “a governmental unit may not deny, revoke, suspend, or refuse to renew 

a license, permit, charter, franchise, or other similar grant to . . . a bankrupt or a 

debtor under the Bankruptcy Act . . . solely because such bankrupt or debtor is or 

has been . . . a bankrupt or debtor under the Bankruptcy Act.” 11 U.S.C § 525(a). 

The statute’s plain text clearly delineates that its protections extend only to 

specific, enumerated benefits or interests. As the parties appear to agree (and we 

independently conclude) that the PPP is not a “license,” “permit,” “charter,” or 

“franchise,” we focus our inquiry solely upon “grant.” 
29

Because “grant” is undefined, we give the term its ordinary meaning, 

considering the “commonly understood meaning of the statute’s words at the time 

Congress enacted the statute, and with a view to their place in the overall statutory 

scheme.” In re Bernard L. Madoff Inv. Secs. LLC, 12 F.4th 171, 186 (2d Cir. 2021)

(internal quotation marks omitted). In legal terms, a grant is “[a]n agreement that 

creates a right or interest in favor of a person or that effects a transfer of a right or 

interest from one person to another.” Grant, Black’s Law Dictionary (11th ed. 

2019). This does not mean, however, that any governmental agreement or transfer 

creating a right or interest in another person’s favor is entitled to protection under 

Section 525(a). Instead, pursuant to the canon of construction noscitur a sociis, the 

words “other” and “similar” restrict the scope of protected grants to only those 

that conceivably resemble the other listed terms in the statute—licenses, permits, 

charters, and franchises. See Homaidan v. Sallie Mae, Inc., 3 F.4th 595, 604 (2d Cir. 

2021) (stating that noscitur a sociis “counsels that a word is given more precise 

content by the neighboring words with which it is associated” (internal quotation 

marks omitted)). Although the exact nature of this resemblance is not articulated 

in the statute, the plain language of the terms, as well as our precedent, suggest 

that these interests all share two common qualities: they are (1) “unobtainable 
30

from the private sector” and (2) “essential to a debtor’s fresh start.” Stoltz v. 

Brattleboro Hous. Auth. (In re Stoltz), 315 F.3d 80, 90 (2d Cir. 2002). 

Thus, two things are clear from this analysis of the statute’s plain language. 

First, given the textual limitations on the listed items in the statute, it is evident 

that credit guarantees—in other words, loans—are not covered by the provision. 

As we held in Goldrich, “[a] credit guarantee is not a license, permit, charter or 

franchise; nor is it in any way similar to those grants. . . . Although the exact scope 

of the items enumerated may be undefined, the fact that the list is composed solely 

of benefits conferred by the state that are unrelated to credit is unambiguous.” 771 

F.2d at 30. Second, the text makes plain that it is insufficient for an item to fall 

within the general definition of “grant” to qualify for protection under Section 

525(a). Instead, protection is only extended to those governmental grants that 

possess the two qualities we have identified as shared among the other listed 

terms. See Stoltz, 315 F.3d at 90. Before we can apply these two principles to the 

PPP, however, we must address in more detail the parties’ dispute over our 

precedentregarding the scope of Section 525(a), including Springfield’s contention 

that Goldrich is no longer good law. 
31

B. Our Precedent 

The parties dispute which of our two Section 525(a) cases—Goldrich or 

Stoltz—controls the instant issue. The bankruptcy court described these cases as 

presenting “markedly different analyses of [Section] 525(a)” and ultimately 

concluded that Stoltz marked our clear “departure from—and disproval of” our 

earlier analysis in Goldrich. Special App’x at 13, 17. We disagree.

Section 525 evolved from Perez v. Campbell, 402 U.S. 637 (1971), a bankruptcy 

case in which the Supreme Court held that a state law conditioning the 

reinstatement of a driver’s license on the repayment of a debt—despite that debt 

having been discharged in bankruptcy—conflicted with the Bankruptcy Code’s 

“policy of a fresh start for a debtor.” S. Rep. No. 95-989, at 81 (1978), as reprinted in 

1978 U.S.C.C.A.N. 5787, 5867; see also Goldrich, 771 F.2d at 30 (recognizing 

Congress’s codification of Perez); Stoltz, 315 F.3d at 87 (same). Notwithstanding 

this “fresh start” policy, when we first examined Section 525 in Goldrich, we held 

that the provision did not extend so far as to cover a New York student loan 

guaranty program. Goldrich, 771 F.2d at 30. In reaching this holding, we relied 

upon the provision’s plain language, reasoning that “[h]ad Congress intended to 

extend this section to cover loans or other forms of credit, it could have included 
32

some term that would have supported such an extension.” Id. Thus, we concluded 

that “Congress’ failure to manifest any intention to include items of a distinctly 

different character” was unambiguous. Id. Further, we noted that, although the 

legislative history could be interpreted to “allow expansion” of Section 525(a), that 

same legislative history also indicated “that such expansion would be limited to 

situations sufficiently similar to Perez to fall within the enumeration,” and, 

accordingly, we refused to stretch Section 525(a) “so far beyond the limits set by 

Congress.”20 See id. at 30–31. Our reasoning was soon adopted by two other circuit 

courts, which likewise concluded that Section 525 did not cover loans or other 

programs dissimilar to the enumerated items. See Watts v. Pa. Hous. Fin. Co., 876 

F.2d 1090, 1093–94 (3d Cir. 1989) (holding that the unambiguous text of Section 

525 did not cover an emergency mortgage assistance loan); In re Exquisito Servs., 

Inc., 823 F.2d 151, 153–154 (5th Cir. 1987) (adopting the “narrow construction” of 

Section 525(a) outlined in Goldrich to limit the provision “only to situations 

analogous to those enumerated in the statute”). 

20 In Goldrich, we recognized that there was no need to examine Section 525’s legislative history, 

given our determination that the statute was unambiguous. Id. at 30. However, as the lower 

court relied heavily on legislative history in reaching its conclusion that the provision did cover 

student loans, we were prompted to comment upon it. Id.
33

Nine years after our decision in Goldrich, Congress amended Section 525 to 

include a subsection prohibiting discrimination against debtor-borrowers by any 

“governmental unit that operates a student grant or loan program.” 11 U.S.C. 

§ 525(c). Notably, however, Congress left the plain text of Section 525(a) 

untouched. Following this amendment, multiple circuits continued to follow 

Goldrich’s reasoning, concluding that the amendment had narrowly abrogated 

Goldrich’s specific holding as to student loans but had not abrogated its broader 

holding that Section 525(a) did not cover loans in general. See Ayes v. U.S. Dep’t 

of Veterans Affs., 473 F.3d 104, 109–11 (4th Cir. 2006) (holding that a veteran homeloan guaranty entitlement is not an “other similar grant” under § 525(a) and stating 

that, although Section 525(c) “clearly abrogated Goldrich’s specific holding[,] . . . 

[t]here is, however, no indication in the language of [Section] 525(c) that Congress

also intended the section to apply to other kinds of loan guaranties besides those 

of the student loan variety”); Toth v. Mich. State Hous. Dev. Auth., 136 F.3d 477, 479–

80 (6th Cir. 1998) (holding that a government home improvement loan is not 

covered by Section 525(a) and agreeing that, even after the enactment of Section

525(c), the statutory provision “[does] not prohibit consideration of prior 

bankruptcies in credit decisions, since ‘the language of section 525 may not 
34

properly be stretched so far beyond its plain terms’” (quoting Goldrich, 771 F.2d at 

29)).

When we next considered the scope of Section 525(a) in Stoltz, we concluded 

that a public housing lease qualified as a “similar grant,” reasoning that it shared 

the two common qualities as the other items listed in the statute: first, it was, by 

definition, unobtainable in the private sector, and second, it was essential to a 

debtor-tenant’s fresh start, as without it the debtor could “quite possibly become 

homeless.” Stoltz, 315 F.3d at 90. Although we relied upon the plain text of the 

statute in reaching our conclusion, as in Goldrich, we also briefly noted that the 

legislative history supported our reasoning, as portions of that history 

“specifically reject[] a narrow construction of the antidiscrimination provision and 

make[] clear that 525(a) protects the debtor's fresh start.” Id. at 92 n.6.

Notwithstanding the ability to harmonize the analysis in these two 

decisions, the bankruptcy court determined—and Springfield argues on appeal—

that Goldrich no longer carries authoritative weight because it was, alternatively, 

abrogated by congressional enactment or overruled by our subsequent opinion in 

Stoltz. We find these arguments unpersuasive and address each in turn.
35

First, although we recognized in Stoltz that Section 525(c) abrogated 

Goldrich’s specific holding as to student loans, we do not conclude that this 

abrogation nullified the rest of Goldrich’s analysis. For one thing, the plain text of 

Section 525(a) counsels against this conclusion. If Congress had intended Section 

525 to reach all government loans, it could easily have revised Section 525(a) to do 

so. It did not. Instead, Congress enacted the ban on student loan discrimination 

as a separate section, Section 525(c), and left the text of Section 525(a) untouched. 

That Congress chose instead to amend the statute to cover student loans only, and 

no other loans, strongly suggests that other loans are not protected by Section 

525(a) and that Congress made the deliberate choice to exclude them. See Conn. 

Nat’l Bank, 503 U.S. at 253–54 (“[C]ourts must presume that a legislature says in a 

statute what it means and means in a statute what it says there.”); cf. United States 

v. City of New York, 359 F.3d 83, 98 (2d Cir. 2004) (applying the maxim expressio 

unius est exclusio alterius—the mention of one thing implies the exclusion of 

another—“when the statute identifies a series of two or more terms or things that 

should be understood to go hand in hand, thus raising the inference that a similar 

unlisted term was deliberately excluded” (internal quotation marks omitted)). 

Other circuit courts have reached a similar conclusion and have continued to 
36

hold—even after the enactment of Section 525(c), which gave protection to debtors 

for student loans under Section 525(a)—that other extensions of credit are plainly 

outside the ambit of Section 525(a). See, e.g., Ayes, 473 F.3d at 109–11 (describing 

Goldrich as the “lodestar in the [Section] 525(a) context”); Toth, 136 F.3d at 479–80

(adopting Goldrich’s reasoning).

Second, we disagree with the bankruptcy court’s conclusion that Stoltz 

departed from Goldrich’s analysis. To start, Stoltz could not have overruled 

Goldrich even had it presumed to do so, as a subsequent panel “is bound by the 

decisions of prior panels until such time as they are overruled either by an en banc 

panel of our Court or by the Supreme Court.” Lotes Co. v. Hon Hai Precision Indus. 

Co., 753 F.3d 395, 405 (2d Cir. 2014) (internal quotation marks omitted). Moreover, 

nothing about the two decisions suggests that they are irreconcilable. In Goldrich, 

we addressed Section 525(a)’s applicability to loans; in Stoltz, we considered its 

applicability in the context of public housing. That we reached different answers 

regarding the scope of Section 525(a) does not mean that our respective analyses 

contradict each other—it simply means that we were asked the legal question in 

two different factual contexts and, accordingly, reached different conclusions. 

Stoltz scarcely engages with Goldrich, much less purports to overrule it, because of 
37

the starkly different factual contexts presented by each case—that is, the public 

housing lease in Stoltz bore no resemblance to the student loan in Goldrich. Thus, 

although the bankruptcy court suggests that Stoltz’s limited treatment of Goldrich 

proves our rejection of the earlier case, the natural conclusion is, in fact, much 

simpler—in Stoltz, we did not engage with Goldrich because we did not need to. 

Further, the bankruptcy court’s reliance upon Stoltz’s brief analysis of the 

statute’s legislative history as signaling our departure from Goldrich—an argument 

that Springfield also wields to argue that Section 525(a) should be read broadly—

is misplaced. We emphasize that a court may engage with legislative history only 

when the plain meaning of a provision is ambiguous. Although when there is a 

statutory ambiguity we may “consult legislative history . . . to discern Congress’s 

meaning,” Chai v. Comm’r of Internal Revenue, 851 F.3d 190, 218–19 (2d Cir. 2017)

(internal quotation marks omitted), “[w]here the statutory language provides a 

clear answer, [our analysis] ends there,” id. at 217 (internal quotation marks 

omitted). Here, because the statutory language is unambiguous, any reliance on 

legislative history to reach a contrary result is precluded. See Lee v. Bankers Tr. Co., 

166 F.3d 540, 544 (2d Cir. 1999) (“It is axiomatic that the plain meaning of a statute 

controls its interpretation, and that judicial review must end at the statute’s 
38

unambiguous terms. Legislative history and other tools of interpretation may be 

relied upon only if the terms of the statute are ambiguous.” (internal citations 

omitted)); see also Watts, 86 F.3d at 1093 (noting the “obvious difficulty” with the 

argument that the legislative history reveals that “a narrow interpretation of 

section 525 would defeat its purpose . . . is that when an unambiguous statute is 

interpreted to mean what it says, the interpretation is not narrow”); Ayes, 473 F.3d 

at 111 (“[B]ecause § 525(a) is unambiguous, our interpretation is not ‘narrow,’ but 

instead succinctly correct.”). 

In any event, the legislative history is not as dispositive as the bankruptcy 

court or Springfield would have it. To be sure, as both Stoltz and the bankruptcy 

court pointed out, the legislative history of Section 525(a) describes the provision 

as “not exhaustive” and states that it “permits further development to prohibit 

actions by governmental . . . organizations or quasi-governmental organizations 

that perform licensing functions, . . . or by other organizations that can seriously 

affect the debtor’s livelihood.” H. Rep. No. 95-595, at 367 (1977), as reprinted in

1978 U.S.C.C.A.N. 5963, 6323; S. Rep. No. 95-989, at 81, as reprinted in 1978 

U.S.C.C.A.N. at 5866; see Stoltz, 315 F.3d at 92 n.6 (quoting House Report). 

However, this same passage also specifies that Section 525(a) applies only to certain
39

types of governmental organizations and does not create a blanket prohibition on 

bankruptcy discrimination, specifically noting that Congress rejected just such a 

blanket prohibition. See S. Rep. No. 95-989, at 81, as reprinted in 1978 U.S.C.C.A.N. 

at 5866 (“The section is not so broad as a comparable section proposed by the

Bankruptcy Commission, which would have extended the prohibition to any 

discrimination, even by private parties.” (internal citation omitted)). Moreover, 

the legislative history also notes that Section 525(a) “does not prohibit 

consideration of other factors, such as future financial responsibility or ability, and 

does not prohibit imposition of requirements such as net capital rules, if applied

nondiscriminatorily.” Id. At a minimum, the legislative history can be used to 

support either a broad or narrow reading of Section 525(a) and therefore does not 

provide clear insight into the intended scope of Section 525(a). Thus, even 

assuming, arguendo, that the statute was ambiguous (which it is not), the legislative 

history provides little assistance for interpreting the scope of Section 525(a) in this 

context. Cf. Gayle, 342 F.3d at 93–94 (stating that, although we may consider 

legislative history in the event of a statutory ambiguity, it is “equally important” 

that there “exist[] authoritative legislative history that assists in discerning what 

Congress actually meant”). 
40

In sum, neither Congress’s enactment of Section 525(c) nor our decision in 

Stoltz disturbed Goldrich’s fundamental holding, which we reaffirm here, that the 

plain text of Section 525(a) does not cover loan programs. Accordingly, our 

analysis turns to whether the PPP is properly classified under Section 525(a) as a 

“loan” or as an “other similar grant.” 

C. PPP is a Loan Program Uncovered by Section 525(a) 

The bankruptcy court concluded that the PPP, “[w]hile nominally 

designated as a ‘loan,’” was, in substance, a “grant or support program[] aimed at 

helping people in financial distress” due to the PPP’s forgiveness mechanism and 

lack of underwriting. Special App’x at 19. We disagree and conclude that the PPP 

is, in substance and in form, a loan program that is not covered under Section 

525(a).

Although we recognize that we must analyze the substance of the PPP, 

rather than just its nomenclature, it is nevertheless significant that Congress chose 

to characterize the PPP as a “loan” in the CARES Act. Indeed, the CARES Act uses 

the word “loan” approximately 75 times when describing the PPP. See Tradeways, 

Ltd., 2020 WL 3447767, at *17 (“In total, the word ‘loan’ appears some 75 times in 

the CARES Act provisions establishing the PPP. The takeaway is clear: the $659 
41

billion disbursed to borrowers through the PPP are loans, not grants.”). For 

instance, as just a small sample, the CARES Act authorizes the SBA to “guarantee 

covered loans” issued pursuant to the PPP, 15 U.S.C. § 636(a)(36)(B), directs the 

SBA to “register the loan” no less than 15 days after “the date on which a loan is 

made,” id. § 636(a)(36)(C), refers to the maximum amount of PPP that can be 

received as a “[m]aximum loan amount,” id. § 636(a)(36)(E), and describes lenders 

as employing the SBA’s authority to “make and approve covered loans,” id. § 

636(a)(F)(ii)(I). Classifying the PPP as a grant program, rather than a loan 

program, thus directly contradicts the references to it as a loan in the CARES Act. 

See Conn. Nat’l Bank, 503 U.S. at 253–54. 

To be sure, if the PPP truly operated as a grant, its mere designation as a 

“loan” in the CARES Act would not prevent us from classifying it as a “grant” for 

purposes of Section 525(a). However, that is not the case here. Instead, the 

substance of the PPP conclusively demonstrates that it is, as described, a loan

guaranty program, not a grant program.

First, the structure of the PPP provides compelling support for our 

conclusion. As discussed above, Congress placed the PPP within Section 7(a) of 

the Small Business Act—the SBA’s primary mechanism for providing financial 
42

assistance to businesses—and authorized the SBA to adopt the “same terms, 

conditions, and processes” for PPP loans as for 7(a) loans. 15 U.S.C. § 636(a)(36)(B); 

see Pharaohs, 990 F.3d at 224. Further, consistent with the SBA’s standard loan 

practices, “PPP loans are made through private lenders and participants sign 

promissory notes, subject to SBA guarantees.” Schuessler, 2020 WL 2621186, at *9; 

see 11 U.S.C. § 636(a)(36)(F)(ii)(II); 85 Fed. Reg. at 23,450–51. Additionally, PPP 

loans share several other common loan features, including set interest rates, 

maturation dates, refinancing terms, and deferral mechanisms. See, e.g., 11 U.S.C. 

§ 636(a)(36)(L)–(M); 85 Fed. Reg. at 20,811, 20,813–14. 

Second, the forgiveness mechanism upon which Springfield’s argument so 

heavily relies does not automatically convert PPP funds from loans into grants. 

For one thing, forgiveness is neither automatic nor guaranteed. A borrower must 

apply for forgiveness, which will only be granted if specified criteria are met, see

11 U.S.C. § 636m(b)–(d), and the CARES Act places several additional conditions 

upon obtaining forgiveness. For example, funds are not forgivable if the employer 

does not spend a minimum amount of the loan directly on payroll expenses, id. 

§ 636m(d)(8), and the potential forgivable amount is reduced if employee salaries 

are decreased by more than 25%, id. § 636m(d)(3)(A). Further, if the loans are not 
43

used for statutorily authorized purposes—which do not fully overlap with all 

statutorily permissible uses—the loans must be repaid in full to the private lender. 

See 85 Fed. Reg. at 20,814. Moreover, the PPP’s forgiveness mechanism is not 

especially unique, as there are other federal loan programs that allow debtors to 

obtain forgiveness under certain criteria. See, e.g., 20 U.S.C. § 1087e(m)(1) (Public 

Service Loan Forgiveness Program); 20 U.S.C. § 1087j(b) (Teacher Loan 

Forgiveness Program). In short, the mere existence of a forgiveness option does 

not turn the PPP into a grant of “free money,” as the bankruptcy court 

characterized it. Special App’x at 20. A forgiveness option, favorable as it is, 

cannot alter the structure of what a loan forgiveness program fundamentally is—

namely, a program to forgive loans.

Third, although Springfield argues that the SBA “conducts no review for 

creditworthiness or to determine ‘sound value’ of applications,” Appellee 

Springfield’s Br. at 37, and although the bankruptcy court concluded that the “lack 

of any underwriting” indicated that the PPP does not issue true “loans,” see Special 

App’x at 19, these arguments again disregard the plain language of the CARES 

Act. The Act explicitly preserves Section 7(a)’s “sound value” requirement for all 

PPP loans. See 15 U.S.C. § 636(a)(6) (“All loans made under this subsection shall 
44

be of such sound value or so secured as reasonably to assure repayment.”); see also 

In re Gateway Radiology, 983 F.3d at 1257 (“Congress knew how to suspend or 

render inapplicable to PPP loans the traditional § 7(a) requirements when it 

wanted to do so, and it did that with some of the requirements. But not the sound 

value requirement.”). Moreover, PPP funds are not distributed without any riskmitigation mechanisms or any expectation of repayment. PPP loans are structured 

with explicit risk-management features, such as the promissory note requirement, 

as well as features that expressly contemplate repayment, such as set interest rates, 

maturation dates, and deferral mechanisms. See 85 Fed. Reg. at 20,811, 20,813–14; 

85 Fed. Reg. at 23,450–51. Further, the SBA’s decision to bar bankrupt debtors 

from receiving these loans is itself a means of screening for creditworthiness. See 

85 Fed. Reg. at 23,451 (“The Administrator, in consultation with the Secretary [of 

the Treasury], determined that providing PPP loans to debtors in bankruptcy 

would present an unacceptably high risk of an unauthorized use of funds or nonrepayment of unforgiven loans.”). In short, the streamlined underwriting and 

credit assessment processes for the PPP loans, taken in the context of the program’s

other features, do not convert PPP loans into grants. Instead, these streamlined 

processes represent deliberate choices made to best distribute much-needed loans
45

quickly and efficiently in the middle of a pandemic. See, e.g., 85 Fed. Reg. at 20,811 

(“The intent of the [CARES] Act is that SBA provide relief to America’s small 

businesses expeditiously.”); id. at 20,811–20,812 (“The CARES Act was enacted to 

provide immediate assistance to individuals, families, and businesses affected by 

the COVID-19 emergency.”). Where Congress has deliberately designed what is 

plainly a loan program under the CARES Act, we cannot controvert its clear intent

and re-classify the PPP as a “grant” program for purposes of Section 525(a).

The bankruptcy court, however, determined that the PPP is an “other 

similar grant” protected by Section 525(a) because: (1) the PPP’s favorable terms 

“confer unique benefits impossible to obtain from the private sector;” and (2) 

would “seriously affect [Springfield’s] ability to continue business operations and 

successfully reorganize,” which it concluded was essential to Springfield’s fresh 

start. Special App’x at 20 (internal quotation marks omitted). In so doing, the 

bankruptcy court relied on a strained analogy to the public housing lease at issue 

in Stoltz that we conclude is inapposite. 

Stoltz, in analyzing the parameters of Section 525(a), focused its analysis on 

a specific set of government-issued property interests that relate to an individual’s 

ability to access or pursue their livelihood: “[a] debtor who cannot obtain her real 
46

estate license will be unable to pursue her chosen profession; a debtor who cannot 

obtain his transcript will be unable to apply for certain jobs or further schooling; a 

debtor who cannot obtain a driver’s license will be unable to commute to many 

jobs or school.” Stoltz, 315 F.3d at 90. As the Sixth Circuit explained, the items 

enumerated in Section 525(a) implicate the “government’s role as a gatekeeper in 

determining who may pursue certain livelihoods,” Toth, 136 F.3d at 480, and, as 

the Fourth Circuit noted, “are all governmental authorizations that typically 

permit an individual to pursue some occupation or endeavor aimed at economic 

betterment,” Ayes, 473 F.3d at 108.21 The public housing lease in Stoltz clearly fit

within these interests; individuals qualify for a public housing lease because they 

cannot afford privately available housing and, thus, the lease could only be 

obtained from the government. See Stoltz, 315 F.3d at 90. Further, the denial of a 

lease could lead to eviction or homelessness, making the lease essential to the 

debtor’s future. See id.

When applied to the PPP, this analogy breaks down. If a governmental 

21 The Fourth Circuit noted that this understanding also reconciles any potential tension between 

the student loans at issue in Goldrich (now protected under Section 525(c)) and other, unprotected 

loans, stating that, “[b]ecause education is often crucial to securing employment, [Section] 525(c)’s 

prohibition against discrimination in the granting of student loan guaranties to bankrupts is 

consistent with [Section] 525’s goal of allowing former debtors in bankruptcy to earn a living.” 

Ayes, 473 F.3d at 110 n.6.
47

entity refuses to issue a professional license to a debtor, that debtor is 

unequivocally denied entry into that profession. But if a governmental entity 

refuses to guarantee a PPP loan for a debtor, that debtor is not unequivocally 

excluded from receiving capital from other sources. Ineligible debtors can still 

seek traditional loans from a bank (even if private commercial loans would not 

carry the same generous terms as PPP loans) or can receive other governmental 

support grants as, in fact, Springfield did. Although the denial of a PPP loan may 

inhibit a would-be borrower’s ability to access capital, that rejection does not bar

borrowers from operating their businesses or prevent them from pursuing their 

chosen profession. 

In short, the PPP loans, by their nature, do not share the “common qualities 

of the property interests protected under section 525(a)” as identified in Stoltz—

that is, such loans are not “property interests unobtainable from the private sector 

and essential to a debtor’s fresh start.” 315 F.3d at 90; see also In re Vestavia Hills, 

Ltd., 630 B.R. at 849 (“[T]he inability to receive [PPP funds] does not foreclose the 

person or entity from engaging their chosen livelihood, as the inability to obtain a 

license to operate or a business charter would.”); Tradeways, 2020 WL 3447767, at 

*19 (“Unlike the denial of a medical license or a building permit, the rejection of a 
48

borrower’s PPP application does not completely foreclose the borrower from 

legally pursuing a career. To the contrary, the borrower remains uninhibited to 

conduct business.” (internal citations, quotation marks, and alterations omitted)); 

In re Penobscot Valley Hosp., 2020 WL 3032939, at *14 (concluding that “[t]he 

exclusion of persons involved in bankruptcy from the PPP does not conflict with 

the fresh start or otherwise frustrate the operation of the Bankruptcy Code” as “the 

exclusion . . . is not similar to denying a debtor a license to operate in his chosen 

field and thereby denying the debtor the opportunity to pursue economic 

betterment”); Henry Anesthesia Assocs., 2020 WL 3002124, at *7 (“Through the PPP, 

the government agrees to guarantee loans for eligible borrowers, and agrees to 

forgive those loans if certain conditions are met. However, no legislative authority 

is required to contract for a loan, a loan guarantee, or even forgiveness of a loan, 

and all of these transactions can be obtained in the private market.”).

In sum, we recognize the economic hardships caused by the COVID-19 

pandemic to businesses like Springfield, as well as the undoubted usefulness of 

additional governmental aid in continuing Springfield’s operations and allowing 

it to provide necessary medical services to the community. However, our 

understanding of the economic realities facing businesses in a pandemic cannot 
49

controvert the plain language of the Section 525(a) or our binding precedent in 

Goldrich that reinforces the meaning of that plain language.

D. Subsequent Legislation

Although our conclusion relies on the plain text of the statute, we note that 

the additional PPP legislation enacted after the CARES Act provides further 

support for our interpretation of Section 525(a). We have emphasized the need to 

approach post-enactment legislation with caution. See In re Clinton Nurseries, Inc., 

998 F.3d 56, 66 n.9 (2d Cir. 2021). However, in this particular instance, Congress’s 

subsequent legislation supports its clear intent that PPP loans are not covered by 

Section 525(a).

In the Consolidated Appropriations Act, 2021, Congress amended Section 

525 to expressly bar discrimination based on bankruptcy status in the provisioning 

of certain CARES Act benefits—such as foreclosure moratoriums, 15 U.S.C. § 9056, 

forbearance of certain residential mortgages, id. § 9057, and eviction moratoriums, 

id. § 9058—but notably did not include PPP loans in this amendment, see 11 U.S.C. 

§ 525(d) (“A person may not be denied relief under sections 4022 through 4024 of 

the CARES Act (15 U.S.C. 9056, 9057, 9058) because the person is or has been a 

debtor under this title.”), repealed by Consolidated Appropriations Act, 2021, Pub. 
50

L. 116-260, Div. FF, Title X § 1001(c)(2), 134 Stat. 3217 (Dec. 27, 2020).22 The SBA 

argues that the clear negative inference from this amendment is that other 

provisions of the CARES Act are not covered by Section 525(a). We agree. As 

discussed above, “[w]e presume that Congress legislates against the backdrop of 

existing law.” Pharaohs, 990 F.3d at 227 (citing Garcia v. Teitler, 443 F.3d 202, 207 

(2d Cir. 2006)). Congress’s amendment of Section 525 to include some provisions 

of the CARES Act, but not others, allows us to draw the clear inference that 

Congress decided not to extend the provision’s protections to any portion of the 

Act other than those expressly identified in the new Section 525(d). See Pharaohs, 

990 F.3d at 227 (concluding that Congress’s modification of a longstanding rule 

under Section 7(a) to include some types of businesses but exclude others 

“strongly suggest[ed] that Congress deliberately chose not to change the 

Administrator’s statutory discretion to exclude businesses, other than those it 

expressly identified in the CARES Act”). 

Moreover, as part of the Consolidated Appropriations Act, 2021, Congress 

enacted the Economic Aid Act, creating a “process through which the SBA 

22 The Consolidated Appropriations Act, 2021, contained a sunset provision providing that

subsection (d) of Section 525 would be automatically repealed one year after the date of 

enactment—i.e., on December 27, 2021. 
51

Administrator can issue a written determination that will render certain entities in 

bankruptcy eligible for PPP loans.” Appellant SBA’s Br. at 28 (citing Economic 

Aid Act § 320(a), (f), 134 Stat. at 2015–16). If we were to read Section 525(a) as 

covering PPP loans—if we were to assume all bankrupt debtors were already 

protected from discrimination without requiring approval from the 

Administrator—this provision would be unnecessary. See Tablie v. Gonzales, 471 

F.3d 60, 64 (2d Cir. 2006) (“We are obliged to give effect, if possible, to every clause 

and word of a statute, and to render none superfluous.” (internal quotation marks 

and alterations omitted)).

Insofar as Springfield argues that this subsequent legislation merely reflects 

Congress’s choice not to definitively speak on the issue and instead allow the 

courts to determine the scope of Section 525(a), we disagree. It is clear that 

Congress did definitively speak on the matter, first, by designating the PPP as loans 

and placing them within Section 7(a) and second, by extending Section 525’s 

protections to only certain CARES Act provisions, and not the PPP. This

conclusion is especially apparent given that prior to these amendments, as 

discussed above, the overwhelming majority of federal courts to address the issue 

concluded that Section 525(a) does not cover PPP loans. If that interpretation of 
52

Section 525(a) were truly antithetical to Congress’s wishes, as Springfield suggests, 

it would seem strange to conclude that Congress amended Section 525 but did not 

make its intended construction clear, all to deliberately allow federal courts to 

continue reaching what Congress viewed as the wrong conclusion. Had Congress 

intended Section 525(a) to apply to PPP loan guarantees, it would have expressly 

stated so in the Consolidated Appropriations Act in 2021, as it did with other 

CARES Act sections and as it did previously with student loans in enacting Section 

525(c) after Goldrich. 

~*~*~*~*~*~

In sum, we conclude that the PPP is a loan guaranty program and not an 

“other similar grant,” and we hold that Section 525(a) does not apply to PPP loans. 

Accordingly, the bankruptcy court incorrectly ruled that Springfield was entitled 

to summary judgment and we instead conclude, as a matter of law, that summary 

judgment in SBA’s favor is warranted on the Section 525(a) claim. Moreover, 

because the bankruptcy court’s decision to issue a permanent injunction rested on 

that same error of law, we conclude that the injunction against the SBA should be 

vacated. See ACORN, 618 F.3d at 133. Accordingly, we need not, and do not,

decide whether Section 634(b)(1) renders the SBA immune from injunctive relief.
53

CONCLUSION

For the reasons set forth above, we REVERSE the judgment, VACATE the 

permanent injunction, and REMAND to the bankruptcy court for further 

proceedings consistent with this opinion.