Veltor Underground, LLC v. Small Business Administration, et al.

Congress enacted the Paycheck Protection Program (“PPP”) to fund “payroll costs” in order that small businesses stay afloat during the COVID-19 pandemic. “Payroll costs” are defined to include “the sum of payments of any compensation to or income of a sole proprietor or independent contractor.” Veltor Underground, LLC (“Veltor”) a small business with no W-2 employees, used its PPP loan to pay independent contractors who performed its core services. SBA denied forgiveness, determining that such payments do not count as “payroll costs.” The district court agreed with SBA’s determination and the Sixth Circuit affirmed. The question presented is whether “the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from selfemployment, or similar compensation” includes payments a business with no employees makes to independent contractors on its payroll who provide the business’s core services.