What Is a PPP Loan?
The Paycheck Protection Program (PPP) was introduced by the U.S. federal government in 2020 to help small businesses retain employees during COVID-19. Although funding officially ended in 2021, eligibility rules still apply for loan forgiveness, appeals, and post-audit reviews in 2025.
So, understanding who is not eligible for a PPP loan remains important — especially for those applying for forgiveness, repayment deferrals, or new federal support programs.
Who Is Not Eligible for a PPP Loan?
Here’s a detailed list of individuals, businesses, and situations that made someone not eligible for a PPP loan under U.S. SBA rules — many of which still apply to loan forgiveness eligibility today.
1. Businesses That Were Not in Operation on February 15, 2020
If your business was not actively operating with payroll records or business expenses as of February 15, 2020, you were not eligible for a PPP loan. This date was the strict cut-off used by the SBA.
2. Businesses with Over 500 Employees (Or Not Meeting SBA Size Standards)
PPP loans were only for:
Businesses with 500 or fewer employees, OR
Businesses meeting SBA industry-specific size standards
If your company exceeded these thresholds, you were ineligible for PPP funding.
3. Individuals Who Applied for PPP with False Information
Anyone who submitted false certifications, fake payroll documents, or misrepresented employee counts or wages was not eligible for a PPP loan — and faced federal fraud charges.
4. Publicly Traded Companies or Large Corporations
High-profile, publicly traded companies, even if technically under 500 employees, were deemed ineligible after public backlash and SBA clarification. These entities were expected to have access to other capital.
5. Businesses Involved in Illegal Activities
Any business engaged in illegal activities under federal law — including state-legal marijuana businesses — were automatically ineligible for a PPP loan.
Even if the business was legal under state law, if it violated federal law, it did not qualify.
6. Businesses with Owners Currently in Bankruptcy
If you or any business owner with 20%+ ownership was in active bankruptcy proceedings at the time of application, your PPP loan request was denied automatically.
7. Owners or Partners With Criminal History
Applicants were not eligible for a PPP loan if any 20% or more owner:
Was incarcerated, on probation/parole, or
Had been convicted of fraud, financial crimes, or felony within the last 5 years
8. Lobbyists, Political Organizations, or Government Entities
Any organization primarily involved in political lobbying, campaigning, or government operations was not eligible for PPP loans under SBA guidance.
9. Businesses Without U.S.-Based Operations
If your business did not operate within the U.S., or your employees were primarily overseas, you were not eligible for PPP loans. The program was designed for U.S. payroll protection only.
10. Sole Proprietors or Independent Contractors Without Proof of Income
Self-employed individuals needed to prove:
A Schedule C tax return (Form 1040)
Net income from 2019 or 2020
Active business activity as of Feb 15, 2020
Without this proof, you were not eligible for a PPP loan.
Who Was Eligible for PPP Loans?
U.S.-based businesses in operation as of Feb 15, 2020
Under 500 employees (or SBA size standard)
Sole proprietors, independent contractors, nonprofits
Businesses impacted by COVID-19
Applicants with clean legal/financial records
What About 2025 PPP Loan Forgiveness or Audits?
As of 2025, PPP loans are no longer being issued, but:
Forgiveness applications are still being accepted
SBA audits and fraud investigations are ongoing
Knowing who is not eligible for a PPP loan can protect you if you’re submitting forgiveness or being reviewed
Key Takeaways: Who Is Not Eligible for a PPP Loan?
✅ You were not eligible for a PPP loan if:
Your business was not active on Feb 15, 2020
You had more than 500 employees (without an exception)
You submitted false info or documents
Your business was engaged in illegal activity
You or owners had criminal or bankruptcy history
FAQ
❓ Can I get a PPP loan if my business started after Feb 15, 2020?
No. Your business had to be active by Feb 15, 2020 to qualify.
❓ Are marijuana dispensaries eligible for PPP?
No. Even if legal in your state, they are illegal under federal law and were not eligible.
❓ If I was in bankruptcy, was I eligible?
No. Active bankruptcy at time of application made you ineligible.
❓ Can I apply now in 2025?
No. The PPP loan program ended in 2021, but loan forgiveness and audits continue in 2025.
❓ What if I got a PPP loan but didn’t qualify?
You could be required to repay it, return the funds, or face legal action. Consult with an attorney or the SBA.
Final Thoughts
Understanding who is not eligible for a PPP loan is still crucial in 2025 — whether you’re:
Applying for loan forgiveness
Responding to an SBA audit
Filing an appeal
Preparing for future government business relief programs
✅ Always verify your eligibility through official SBA sources and stay compliant.