A recent ruling by the Seventh Circuit Court of Appeals has significant implications for nursing homes across the United States. The court decided that the Small Business Administration (SBA) can limit the amount of loan forgiveness for businesses under common ownership. This ruling affects 203 nursing homes that sought financial assistance during the COVID-19 pandemic through the Paycheck Protection Program (PPP) established by the CARES Act.

The case, Forest View Rehabilitation and Nursing Center, LLC v. United States Small Business Administration, was filed on July 14, 2026, under docket number 25-1348. The court's decision came after the nursing homes, including Oak Lawn Respiratory and Rehabilitation Center, claimed that the SBA's Corporate Group Rule unfairly restricted their access to loan forgiveness. The ruling is crucial as it clarifies how federal loan guarantees can be applied to businesses that are part of a larger corporate group.

Background

The plaintiffs in this case are several nursing homes, including Oak Lawn, which are under common control and management. They applied for loans under the CARES Act, which was designed to provide financial relief to businesses affected by the COVID-19 pandemic. The PPP allowed businesses to receive loans that could be forgiven if certain conditions were met, including maintaining employee payroll.

However, the demand for these loans exceeded the available funds, prompting the SBA to implement the Corporate Group Rule. This rule limits the total amount of PPP loans a corporate group can receive to $20 million. The nursing homes argued that each facility should be treated as a separate entity eligible for the full loan amount. The case reached the Seventh Circuit after the district court granted summary judgment in favor of the SBA, leading the nursing homes to appeal the decision.

The Ruling

The Seventh Circuit, led by Judge Frank Easterbrook, upheld the SBA's Corporate Group Rule. The court found that the rule was a valid exercise of the agency's discretion under the CARES Act. Judge Easterbrook stated, "The Corporate Group Rule does not declare any LLC or corporation to be ineligible for a loan guarantee. The question at hand is how much of a loan the federal government will guarantee, not whether any given firm is eligible for benefits."

The court emphasized that while the CARES Act allows for loan guarantees, it does not mandate that every applicant receives the maximum amount. The ruling clarified that the SBA has the authority to impose limits on loan guarantees to ensure that resources are distributed fairly among all applicants. The decision also addressed the nursing homes' arguments regarding retroactivity, concluding that the application of the Corporate Group Rule was appropriate.

Impact

This ruling has far-reaching consequences for nursing homes and other businesses that operate under common ownership. By affirming the SBA's Corporate Group Rule, the court has set a precedent that allows federal agencies to impose aggregate limits on loan guarantees for affiliated businesses. This decision may affect how businesses structure their operations and apply for federal loans in the future.

The ruling also underscores the importance of understanding the implications of federal regulations on business operations. Nursing homes and similar entities must now navigate the complexities of federal loan programs with an awareness of how ownership structures can impact their eligibility for financial assistance. This decision could serve as a guide for future cases involving loan forgiveness and corporate structures.

What's Next

Details were not available in the court filing regarding whether the nursing homes plan to appeal this decision. However, the ruling sets a clear standard for how the SBA can manage loan forgiveness for corporate groups under the CARES Act.