No Forgiveness Without Eligibility: Fifth Circuit Defines PPP Loan-Forgiveness Limits in Bruckner Truck Sales v. Guzman (2025)

1. Introduction

The Fifth Circuit’s decision in Bruckner Truck Sales, Inc. v. Guzman, No. 24-10377 (Aug. 6, 2025) delivers the first appellate-level clarification of a question that has fueled hundreds of Paycheck Protection Program (PPP) disputes: Can a borrower who was never eligible for a PPP loan nevertheless obtain loan forgiveness? The Court’s answer is an emphatic “No.”

The case pits Bruckner Truck Sales, Inc.—a Texas truck-sales company that admittedly exceeded the PPP’s employee-size limits—against the Small Business Administration (SBA), its Administrator Isabel Guzman, the Treasury Department, and the United States. After SBA demanded the return of a $10 million loan that should never have issued, Bruckner sued, claiming that § 1106 of the CARES Act entitled it to loan forgiveness regardless of underlying eligibility. The district court rejected the claim on summary judgment; the Fifth Circuit now affirms.

2. Summary of the Judgment

Holding: PPP loan forgiveness under 15 U.S.C. § 636m is available only to borrowers that were eligible for the underlying loan under § 636(a)(36); a loan illegally issued cannot be forgiven.
Statutory Interpretation: In the context of the CARES Act, the phrase “loan guaranteed under § 636(a)(36)” means “a loan granted in accordance with the requirements of that section,” not merely “pursuant to” it.
Administrative Law: The SBA’s denial was upheld under the Administrative Procedure Act (APA) because it was neither arbitrary nor in excess of statutory authority; the Court conducted a de novo statutory analysis independent of Chevron deference, consistent with Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).
Retroactivity & Chenery: The Interim Final Rule (IFR) clarifying eligibility was interpretive, not retroactive; and the SBA’s litigation arguments permissibly elaborated on grounds previously articulated in agency materials.

3. Analysis

3.1 Precedents Cited and Their Influence

Shell Offshore Inc. v. Babbitt, 238 F.3d 622 (5th Cir. 2001): supplied the standard for reviewing agency action under the APA.
Nat’l Ass’n of Mfrs. v. Dep’t of Def., 583 U.S. 109 (2018): recognized “under” as a “chameleon” term. The Fifth Circuit invoked this case to justify context-driven interpretation.
Harrow v. Dep’t of Defense, 601 U.S. 480 (2024) & Pereira v. Sessions, 585 U.S. 198 (2018): contrasting meanings of “under.” Their juxtaposition illustrated the need to adopt the meaning that avoids statutory absurdity.
United States v. Kirby, 74 U.S. 482 (1868) & County of Maui v. Hawaii Wildlife Fund, 590 U.S. 165 (2020): canonical “absurd-result” cases used to reject borrower’s interpretation that would “create a massive loophole.”
Anderson, Clayton & Co. v. United States, 562 F.2d 972 (5th Cir. 1977): groundwork for distinguishing interpretive rules from retroactive legislative rules, defeating Bruckner’s retroactivity challenge.
SEC v. Chenery Corp., 318 U.S. 80 (1943) & DHS v. Regents of the Univ. of Cal., 591 U.S. 1 (2020): allowed the SBA to defend its action on elaborated statutory grounds provided the original rationale was discernible.
Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024): abolition of Chevron deference. The Fifth Circuit confirmed its analysis stood “wholly apart from Chevron,” showing lower courts how to conduct post-Loper Bright statutory review.

3.2 The Court’s Legal Reasoning

Statutory Text and Context
The CARES Act uses two nested definitions: eligible recipient → covered loan → loan guaranteed under § 636(a)(36). Interpreting “under” to require compliance with § 636(a)(36)’s eligibility criteria is the only reading that preserves the nested logic and avoids rewarding ineligible borrowers.
Absurd-Result Canon
Granting forgiveness to ineligible borrowers would “defy ordinary logic” and create “massive loopholes.” The canon empowers courts to reject readings that reach irrational expenditure of taxpayer funds.
Administrative Procedure Act
Because forgiveness denial fell squarely within the statute, the SBA’s decision was neither “arbitrary” nor “in excess of statutory authority” under 5 U.S.C. § 706(2)(A), (C).
Interpretive vs. Retroactive Rulemaking
The IFR merely clarified what the statute already required; therefore, it imposed no new substantive obligations and is not impermissibly retroactive.
Post-Loper Bright Statutory Construction
The court performed an independent judicial reading of the CARES Act, demonstrating that even without agency deference, the outcome is the same—fortifying the decision’s resilience on further review.

3.3 Expected Impact

PPP Litigation: Provides clear precedent for district courts within the Fifth Circuit (and persuasive authority elsewhere) to dismiss forgiveness suits by borrowers that concede ineligibility.
SBA Administrative Practice: Validates the agency’s longstanding position and IFR; strengthens SBA’s hand in recoupment efforts, potentially expediting billions in collections.
Statutory-Interpretation Framework: Demonstrates how lower courts should proceed after Loper Bright—look first to text, context, and canons of construction, not Chevron.
Government Spending Programs: The “no-eligibility-no-forgiveness” principle may migrate to other relief programs—e.g., FEMA disaster grants, student-loan forgiveness—where eligibility prerequisites exist.

4. Complex Concepts Simplified

Paycheck Protection Program (PPP): A COVID-19 emergency loan program guaranteeing low-interest loans to small businesses; loans are forgivable if spent primarily on payroll.
Interim Final Rule (IFR): A rule that takes effect immediately while still inviting post-promulgation comment. Agencies use IFRs in emergencies to avoid delay.
Administrative Procedure Act (APA): The statute governing federal agency action; courts set aside actions that are arbitrary, capricious, or beyond statutory authority.
Chevron Deference: A now-abrogated doctrine requiring courts to defer to reasonable agency interpretations of ambiguous statutes.
Loper Bright Decision: 2024 Supreme Court ruling eliminating Chevron and restoring de novo judicial review of agency statutory interpretations.
Chenery Doctrine: Agencies must defend actions on the grounds originally invoked; later justifications are allowed only if they elaborate rather than alter the agency’s rationale.

5. Conclusion

Bruckner Truck Sales v. Guzman cements a common-sense rule: Forgiveness follows eligibility. By anchoring its analysis in text, context, and long-standing canons—rather than deferring to agency ipse dixit—the Fifth Circuit delivers a roadmap for post-Loper Bright statutory adjudication. The ruling shields the public fisc, curtails opportunistic claims, and signals that courts will not indulge interpretations producing “massive loopholes.” Practitioners navigating PPP disputes or any statutorily-conditioned relief program must now reckon with this precedent: if you were not entitled to the money in the first place, the courts will not wipe the slate clean.