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Case: 24-30170 Document: 90-1 Page: 1 Date Filed: 07/15/2025
United States Court of Appeals
for the Fifth Circuit
____________ United States Court of Appeals
Fifth Circuit
FILED
No. 24-30170 July 15, 2025
____________
Lyle W. Cayce
Seville Industries, L.L.C., Clerk
PlaintiffâAppellant,
versus
United States Small Business Administration; Isabella
Casillas Guzman; Janet Yellen,
DefendantsâAppellees.
______________________________
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:22-CV-6229
______________________________
Before Clement, Oldham, and Wilson, Circuit Judges.
Andrew S. Oldham, Circuit Judge:
Seville Industries challenges the Small Business Administrationâs de-
cision not to forgive the entirety of its PPP loan. The question presented is
whether the CARES Actâs definition of âpayroll costsâ entitles businesses
to count money paid to independent contractors. It does not, so we affirm.
Case: 24-30170 Document: 90-1 Page: 2 Date Filed: 07/15/2025
No. 24-30170
I
A
1
Congress enacted the Small Business Act of 1953 in Title II of a
broader statute. See
Pub. L. No. 83-163, 67
Stat. 230, 232 (1953) (codified as
amended at
15 U.S.C. §§ 631
et seq.). In 1958, Congress turned Title II into
the freestanding Small Business Act. See
Pub. L. No. 85-536, 72
Stat. 384
(1958). The Small Business Act established the Small Business Administra-
tion (âSBAâ). See
15 U.S.C. § 633
(a). The SBAâs statutory purpose is to
âaid, counsel, assist, and protect insofar as is possible the interests of small-
business concerns in order to preserve free competitive enterprise.â SBA v.
McClellan,
364 U.S. 446, 447
(1960) (quoting 67 Stat. at 232).
The SBAâs main way of aiding small businesses is by financing and
guaranteeing private loans. See
15 U.S.C. § 636
(a). These so-called âSection
7(a) loansâânamed for the provisionâs original location in the Small Busi-
ness Act, see 72 Stat. at 387âare the SBAâs âflagship loan program.â
Robert Jay Dilger, Cong. Rsch. Serv., R41146, Small Busi-
ness Administration 7(a) Loan Guaranty Program 1 (2020),
https://perma.cc/S22J-5LGS. Typically, the SBA âprefers to guarantee
private loans rather than to disburse funds directlyâ to businesses. United
States v. Kimbell Foods, Inc.,
440 U.S. 715
, 719 n.3 (1979) (citing
15 U.S.C.
§ 636
(a)(2)). In practice, this means the SBA guarantees a portion of a small-
business loan that is issued and serviced by a private lender. If the small busi-
ness defaults, then the SBA is required to âpurchase its portion of the
outstanding balance, upon demandâ by the private lender.
13 C.F.R.
§ 120.2
(a)(2) (2025). These âSBA-backed loans make it easier for small
businessesâ to âget funding by setting guidelines for loans and reducing
2
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No. 24-30170
lender risk.â Loans, U.S. Small Bus. Admin., https://perma.cc/T8TJ-
SY3N.
The SBA also has rulemaking power. See
15 U.S.C. § 634
(b). The
Small Business Act authorizes the SBA Administrator to âmake such rules
and regulations as he deems necessary to carry out the authority vested in
him by or pursuant to this chapter.â
Id.
§ 634(b)(6). The Act further author-
izes the Administrator to âtake any and all actions . . . when he determines
such actions are necessary or desirable in making, servicing, compromising,
modifying, liquidating, or otherwise dealing with or realizing on loans made
under the provisions of this chapter.â Id. § 634(b)(7).
2
In March 2020, âthe COVID-19 pandemic ground economic activity
across the country to a near standstill.â Ramey & Schwaller, LLP v. Zions
Bancorporation NA,
71 F.4th 257, 258
(5th Cir. 2023). In response, on March
27, Congress enacted the Coronavirus Aid, Relief, and Economic Security
Act (âCARES Actâ),
Pub. L. No. 116-136, 134
Stat. 281 (2020). The
CARES Act provided trillions of dollars in emergency assistance to Ameri-
cans. Among other things, it aimed âto help small businesses keep workers
employed during the crisis,â Ramey & Schwaller,
71 F.4th at 258
, by provid-
ing forgivable, low-interest, federally guaranteed loans to âkeep employees
on the payroll,â Camelot Banquet Rooms, Inc. v. SBA,
24 F.4th 640, 644
(7th
Cir. 2022).
The CARES Act aimed to protect payrolls by creating the Paycheck
Protection Program (âPPPâ). See
Pub. L. No. 116-136, §§
1102, 1106, 134
Stat. at 286 (Title IâKeeping American Workers Paid and Employed Act).
Congress âassigned [the PPPâs] implementationâ to the SBA. Ramey &
Schwaller,
71 F.4th at 258
. The PPP authorized the SBA to âguarantee cov-
ered loans under the same terms, conditions, and processes as a loan made
3
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No. 24-30170
underâ the usual Section 7(a) mechanism.
15 U.S.C. § 636
(a)(36)(B). Two
additional features of the PPP are relevant here. First, § 1102 of the CARES
Act expanded the SBAâs Section 7(a) loan program. See id. § 636(a)(36).
Second, § 1106 of the CARES Act provided for the forgiveness of these
government-guaranteed loans issued under the PPP.
First, just like regular Section 7(a) loans, âPPP loans were made by
participating private lenders but guaranteed by the federal government.â
Ramey & Schwaller,
71 F.4th at 258
. But unlike ordinary Section 7(a) loans,
PPP loans were available not only to small businesses but also to independent
contractors, sole proprietors, and other eligible self-employed individuals.
See
15 U.S.C. § 636
(a)(36)(D)(i), (ii). The PPP expanded the eligibility for a
small business to include any eligible entity with 500 employees or fewer.
Compare
13 C.F.R. § 121.301
(a), with
15 U.S.C. § 636
(a)(36)(D)(i). And it ex-
panded the number of qualified lending institutions beyond the preexisting
Section 7(a) lenders. See
id.
§ 636(a)(36)(F)(iii).
The PPP allowed eligible applicants to borrow money up to a âmaxi-
mum loan amountâ using a formula based on its âpayroll costs incurredâ the
previous year, in all events capped at $10 million. Id. § 636(a)(36)(E). That
key term, âpayroll costs,â is statutorily defined: â[T]he term âpayroll costsâ
. . . means . . . the sum of payments of any compensation with respect to
employees . . . and . . . the sum of payments of any compensation to or
income of a sole proprietor or independent contractor that is a wage, com-
mission, income, net earnings from self-employment, or similar compensa-
tion.â Id. § 636(a)(36)(A)(viii). Once obtained, PPP loan proceeds could be
used only for specified expenses such as payroll, mortgage interest, rent, util-
ities, and various employee benefits. Id. § 636(a)(36)(F)(i). Ultimately, the
PPP made â$659 billion of government-guaranteed loans available to quali-
fied small businesses.â In re Hidalgo Cnty. Emergency Serv. Found.,
962 F.3d
838
, 840 & n.1 (5th Cir. 2020).
4
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No. 24-30170
Second, PPP loans are generally forgivable in whole or in part. See gen-
erally 15 U.S.C. § 636m. PPP borrowers are eligible for loan forgiveness in
an amount equal to the costs they incurred on the specified expenses. See id.
§ 636m(b)(1)â(8). To secure forgiveness, PPP borrowers must specify âthe
number of full-time equivalent employees on payroll and pay ratesâ and cer-
tify that, inter alia, âthe amount for which forgiveness is requested was used
to retain employees.â Id. § 636m(e)(1), (3). 1 But the statute limits the
amount of loan forgiveness available in a few ways. See id. § 636m(d). For
example, the amount of forgiveness cannot exceed the loan principal. See id.
§ 636m(d)(1). The amount of forgiveness is reduced proportionately with
how much a PPP borrower reduced the number of employees on its payroll.
See id. § 636m(d)(2). And the amount of forgiveness is reduced by the
amount the PPP borrower cut its employeesâ wages beyond 25 percent. See
id. § 636m(d)(3).
To ensure speedy administration of the PPP during the early stages
of the pandemic, the CARES Act required the SBA to implement the pro-
gram within 15 days of the Actâs enactment. See id. § 9012; see also In re Gate-
way Radiology Consultants, P.A.,
983 F.3d 1239, 1262
(11th Cir. 2020)
(describing this timeframe as âpractically warp speed for regulatory
actionâ). To achieve that speed, Congress gave the SBA emergency rule-
making authority exempted from the usual notice-and-comment require-
ments of the APA. See
15 U.S.C. § 9012
.
_____________________
1
Note that âpayroll costsâ has the same statutory definition for loan forgiveness
as it does for determining the maximum loan amount in the first instance. 15 U.S.C.
§ 636m(a)(12) (cross-referencing id. § 636(a)(36)).
5
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No. 24-30170
3
Under that emergency rulemaking authority, the SBA issued an
interim final rule implementing the PPP within its 15-day deadline. See
85
Fed. Reg. 20811
, 20811 (Apr. 15, 2020) (codified at 13 C.F.R. pt. 120)
(âIFRâ). The IFR was posted on the SBA and Treasury websites on April
2, 2020; was effective April 15, 2020; and applied to PPP applications
through June 30, 2020, or until PPP funds were exhausted. See
ibid.
The IFR
explained the PPP loan eligibility and application requirements to potential
borrowers and detailed the responsibilities of private lenders under the
streamlined PPP process.
Id.
at 20812â16.
Relative to the typical Section 7(a) loan process, that streamlined pro-
cess simplified the lendersâ underwriting obligations. See
id. at 20815
. It
allowed private lenders âto rely on certifications of the borrower in order to
determine eligibilityâ and âspecified documents provided by the borrower
to determine qualifying loan amount and eligibility for loan forgiveness.â
Id.
at 20812
. And in addition to all preexisting Section 7(a) lenders, the IFR
authorized new qualified lenders to make PPP loans, including all âfederally
insured depository institution[s]â and âfederally insured credit union[s].â
Id. at 20815
.
Given the hurry to get cash in workersâ hands during those early days
of the pandemic, the IFR ensured applicants were âinformed o[f] how to
apply for a loan and the terms of the loan . . . as soon as possible.â
Id. at
20811
. The IFR explained that the maximum loan amount would be âcalcu-
late[d] using a payroll-based formula specified in the Actâ as discussed
above.
Id. at 20812
. It clarified that â[p]ayroll costs consist of compensation
to employeesâ in various forms and, âfor an independent contractor or sole
proprietor,â they consist of âwages, commissions, income, or net earnings
from self-employment.â
Id. at 20813
. It told applicants that independent
6
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No. 24-30170
contractors âdo not count for purposes of a borrowerâs PPP loan calcula-
tionâ because they âhave the ability to apply for a PPP loan on their own.â
Ibid.
Same for loan forgiveness.
Id. at 20814
. And the IFR emphasized the
CARES Actâs âoverarching focus on keeping workers paid and employed.â
Ibid.
The PPPâs rapid implementation and reliance on self-certification in
the early days of the pandemic made it a target for fraud. A July 2021 GAO
report noted that the program had âlimited . . . safeguardsâ that âresulted in
improper payments and fraud risks.â Govât Accountability Off.,
Paycheck Protection Program: SBA Added Program
Safeguards, But Additional Actions Are Needed 2 (2021),
https://perma.cc/74MC-535D. Relying on its power under
15 U.S.C.
§ 634
(b)(6), (7), and (11) to audit and investigate compliance with the Act
and its regulations, the SBA launched a system of PPP loan review via
interim final rule. See
85 Fed. Reg. 33010
( June 1, 2020). Under that system,
the SBA would deny a PPP borrowerâs loan forgiveness application if it
determined that the borrower was ineligible for the PPP loan amount in the
first place.
Id. at 33012
.
B
Seville Industries, LLC is based in Abbeville, Louisiana. It provides
âproducts, services, and work crews to businesses operating in the oil and
gas sector.â ROA.143. Seville employed 58 W-2 employees and 111 inde-
pendent contractors when the COVID-19 pandemic started.
On April 7, 2020, Seville applied for a PPP loan from Loan Source
Inc., an SBA-approved private lender. On its application, Seville stated that
it had 53 employees and an average monthly payroll of $1,271,193. This
7
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No. 24-30170
apparently yielded a loan amount of $2,578,351. 2 The payroll calculation on
Sevilleâs application included compensation it paid to independent contrac-
tors, whom it did not count among its âemployees.â Two days later, the
SBA approved Sevilleâs PPP application, and on April 17, Loan Source dis-
bursed the money to Seville.
Just over a year later, in August 2021, Seville applied for full forgive-
ness of its PPP loan. Three days later, the SBA notified Loan Source that it
was reviewing Sevilleâs PPP loan because the maximum loan for 53 employ-
ees should have been $1,104,149âabout $1.5 million less than Seville had
received. It requested a copy of Sevilleâs loan application along with support-
ing documentation and analysis. That September, the SBA requested addi-
tional information. After getting it in February 2022, the SBA notified Loan
Source that it was considering a full denial of Sevilleâs PPP loan forgiveness
application because Seville included payments to independent contractors in
its calculation of payroll costs.
On March 28, 2022, the SBA issued to Seville its PPP Final SBA
Loan Review Decision. The SBA determined that Seville was entitled only
to partial forgiveness for the amount of the PPP loan based on money paid to
employees rather than to independent contractors. The next day, the SBA
reimbursed Seville $687,508.64 in principal and $13,392.29 in interest.
Seville appealed the SBAâs decision to the SBA Office of Hearings
and Appeals (âOHAâ). The OHA denied the appeal. Seville petitioned for
reconsideration, which the OHA also denied.
In December 2022, Seville timely appealed the SBAâs final agency
decision to the Western District of Louisiana. See
13 C.F.R. § 134.1211
(g)
_____________________
2
Although not at issue in this litigation, the amount calculated for Sevilleâs total
PPP loan was incorrect in a few respects, which Seville admits.
8
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No. 24-30170
(âFinal decisions may be appealed to the appropriate Federal district court
only.â); Seville Indus. LLC v. U.S. Small Bus. Admin., No. 22-CV-06229,
2024 WL 697592
, at *3 (W.D. La. Feb. 20, 2024). The district court granted
summary judgment to the SBA.
Id. at *8
.
Seville timely appealed to our court. Our review is de novo. Loper Bright
Enters. v. Raimondo,
603 U.S. 369
, 400 (2024).
II
The question in this case is whether the CARES Actâs reference to
âpayroll costs,â
15 U.S.C. § 636
(a)(36)(A)(viii), allowed Seville to borrow a
federally guaranteed loan for $1.5 million at 1 percent interest on the basis of
money it paid to independent contractors, spend not a single cent of it on
keeping independent contractors working during the pandemic, and then
have those loans forgiven on the back end. The answer is no. That conclusion
is supported by (A) the statuteâs text and structure and (B) the statutory
scheme more generally. (C) Sevilleâs contrary reading is unpersuasive.
A
âIn matters of statutory interpretation, text is always the alphaâ and
âomega.â In re DeBerry,
945 F.3d 943, 947
(5th Cir. 2019). Here is the oper-
ative statutory text:
9
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The term âpayroll costsâ--
(I) means--
(aa) the sum of payments of any compensation with
respect to employees that is a--
(AA) salary, wage, commission, or similar
compensation;
(BB) payment of cash tip or equivalent;
(CC) payment for vacation, parental, family, medical,
or sick leave;
(DD) allowance for dismissal or separation;
(EE) payment required for the provisions of group
health care or group life, disability, vision, or
dental insurance benefits, including insurance
premiums;
(FF) payment of any retirement benefit; or
(GG) payment of State or local tax assessed on the
compensation of employees; and
(bb) 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
self-employment, or similar compensation and that is
in an amount that is not more than $100,000 on an
annualized basis, as prorated for the period during
which the payments are made or the obligation to
make the payments is incurred[.]
15 U.S.C. § 636
(a)(36)(A)(viii).
The provisionâs âtext and structure . . . indicate that the language
preceding the em dash[] distributes throughout the statutory sentence.â
United States v. Palomares,
52 F.4th 640, 650
(5th Cir. 2022) (Oldham, J.,
concurring). So the phrase âthe term âpayroll costsâ meansâ distributes to
10
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No. 24-30170
âevery item on the ensuing list.â Pulsifer v. United States,
601 U.S. 124, 134
(2024). The provision thus reads:
(aa) [The term âpayroll costsâ means] the sum of payments of
any compensation with respect to employees . . . ; and
(bb) [The term âpayroll costsâ means] the sum of payments of
any compensation to or income of a sole proprietor or in-
dependent contractor that is a wage, commission, in-
come, net earnings from self-employment, or similar
compensation.
15 U.S.C. § 636
(a)(36)(A)(viii) (emphasis added).
The statute therefore tells us what ââpayroll costsâ . . . meansâ for
businesses with employees and for independent contractors. âMeans,â of
course, indicates a definition. See Mean, Websterâs New Inter-
national Dictionary 1519 (2d ed. 1934; 1950) (âWebsterâs
Secondâ) (âTo have in mind as the object, application, signification, or
the like.â). So for businesses or other organizations with a traditional payroll,
subsection (aa) defines âpayroll costsâ as âthe sum of payments of any
compensation with respect to employeesâ such as wages, tips, leave,
severance, insurance, and retirement benefits.
15 U.S.C.
§ 636
(a)(36)(A)(viii)(aa). â[A]ndâ for entities without traditional payrolls,
such as an independent contractor or sole proprietor, subsection (bb) defines
âpayroll costsâ as âthe 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 self-employment, or similar compensation.â
Id.
§ 636(a)(36)(A)(viii)(bb).
Subsection (bb) therefore defines payroll costs as the money earned by
independent contractors or sole proprietors, not as the money paid to them
by businesses. True, âin a vacuum,â Weyerhaeuser Co. v. U.S. Fish & Wildlife
Serv.,
586 U.S. 9, 20
(2018) (quotation omitted), a business like Seville could
11
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No. 24-30170
read âcompensation toâ as a reference to its outflow payments to independ-
ent contractors. But, as the SBA urges, the phrase âcompensation to or
income of a sole proprietor or independent contractorâ is âmost naturally
read as a single integrated element,â Red Br. at 25, referring to all the
amounts earned by a self-employed person. That phraseâs immediate âsur-
rounding context,â Diaz v. United States,
602 U.S. 526, 536
(2024), confirms
that interpretation: The terms âwage, commission, income, net earnings
from self-employment, or similar compensationâ are all ways of capturing
money earned by a self-employed person, not money spent by the business
who hired him. See Fischer v. United States,
603 U.S. 480, 487
(2024)
(explaining that âthe canon of noscitur a sociis teaches that a word is given
more precise content by the neighboring words with which it is associatedâ
(quotation omitted)).
Consider also the article in the phrase âa sole proprietor or independ-
ent contractor,â and contrast that with subsection (aa)âs reference to âcom-
pensation with respect to employees.â
15 U.S.C. § 636
(a)(36)(A)(viii)(aa),
(bb) (emphases added); see also Life Techs. Corp. v. Promega Corp.,
580 U.S.
140, 151
(2017) (explaining the statutory distinction between âsingularâ and
âpluralâ terms). That deliberate difference further confirms that subsection
(aa) encompasses one businessâs payments out to multiple employees while
subsection (bb) describes the eligible money coming in for a single loan appli-
cant who is self-employed. That distinction is hard to reconcile with the
reality that a business can hire many independent contractors for any number
of discrete or irregular tasks, as Seville in fact did.
The ordinary meaning of âpayroll costsâ supports this reading too.
See Delligatti v. United States,
145 S. Ct. 797, 808
(2025) (âWhen choosing
among interpretations of a statutory definition, the âordinary meaningâ of the
âdefined termâ is an important contextual clue.â (quoting Bond v. United
States,
572 U.S. 844, 861
(2014))). âPayrollâ has consistently referred to a
12
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businessâs regular employees who receive paychecks at regular intervals, not
to independent contractors or others that the business may hire for a singular
task or discrete set of jobs. See, e.g., Payroll, Blackâs Law Dictionary
(12th ed. 2024) (âThe total compensation payable to a companyâs employees
for one pay period.â). But see Independent Contractor, Blackâs Law
Dictionary (12th ed. 2024) (âSomeone who is entrusted to undertake a
specific project but who is left free to do the assigned work and to choose the
method for accomplishing it.â). True, subsection (bb) expands the tradi-
tional meaning of payroll costs so that self-employed individuals can also
apply for paycheck protection under the CARES Act. But an emergency
provision giving novel protections to self-employed individuals does not
expand the ordinary meaning of payroll costs for traditionally structured busi-
nessesâa meaning reflected in the enumerated costs of subsection (aa).
B
Our interpretation of âpayroll costsâ comports with the rest of the
CARES Actâs statutory scheme. See Turkiye Halk Bankasi A.S. v. United
States,
598 U.S. 264, 275
(2023) (â[T]he Court must read the words
Congress enacted in their context and with a view to their place in the overall
statutory scheme.â (quotation omitted)). That scheme presupposes that
businesses cannot count payments to independent contractors (or sole pro-
prietors) as payroll costs. Thus, Sevilleâs interpretation introduces many
asymmetries and incongruities with other provisions in the CARES Act. See
Jones v. Hendrix,
599 U.S. 465, 479
(2023) (âWe generally resist attributing
to Congress an intention to render a statute so internally inconsistent.â (quo-
tation omitted)). Two bear emphasis.
First, the statute excludes from payroll costs âcompensation of an
employee whose principal place of residence is outside of the United States.â
15 U.S.C. § 636
(a)(36)(A)(viii)(II)(cc). But the statute does not make the
13
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No. 24-30170
same exclusion for payments to sole proprietors and independent contrac-
tors. Though not impossible, it would be freakish for the statuteâwhich was
aimed at âhelp[ing] small businesses keep workers employed during the
crisis,â Ramey & Schwaller, 71 F.4th at 258âto exclude foreign resident
employees but include foreign resident independent contractors. Seville has
no explanation for that asymmetry. Instead, the commonsense reading is that
the statute does not exclude payments to foreign resident independent con-
tractors because it does not contemplate including payments to any inde-
pendent contractors at all.
Second, the reading we adopt also squares with the conditions of the
loan forgiveness program. The amount of forgiveness to which a PPP bor-
rower is entitled is based on its payroll costs. See 15 U.S.C. § 636m(b)(1). The
forgiveness provision incentivizes businesses to use at least some PPP money
to keep their employees on the payroll, as opposed to using it all on mortgage
interest or rent. To do so, the statute proportionately limits the amount of
loan forgiveness available to a business based on its âreduction in number of
employees,â id. § 636m(d)(2), or cuts it made to the âsalary or wages of any
employeeâ beyond 25 percent, id. § 636m(d)(3)(A). In other words, if small
businesses fired too many employees or reduced wages during the pandemic,
then the amount of their PPP loans eligible for forgiveness is reduced.
But the statute provides no corresponding limitation for cuts to inde-
pendent contractors. Again, Seville has no explanation for this incongruity.
It would make no sense for the statute to provide PPP loans at the outset
based on a businessâs outflows to independent contractors, but then give full
forgiveness on that borrowed money even if the business fired every single
independent contractor. In fact, that is what happened here. At oral argu-
ment, Sevilleâs counsel admitted that, out of the $1.5 million Seville bor-
rowed based on its payments to independent contractors the previous year,
14
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No. 24-30170
it spent precisely $0 on keeping independent contractors working during the
pandemic. Oral Arg. at 11:15â30.
C
Sevilleâs contrary interpretation is unpersuasive. Seville accepts, as it
must, that subsection (bb) authorizes independent contractors to apply for
their own loans. It nevertheless maintains that money spent on independent
contractors could also be added to a businessâs payroll costs along with the
items listed in subsection (aa). The SBAâs interpretation, it alleges, improp-
erly reads âandâ to mean âor . . . in the so-called âdistributiveâ sense.â Blue
Br. at 19. Seville therefore reads âandâ to denote the arithmetical addition of
subsections (aa) and (bb). Thus, Seville would rewrite § 636(a)(36)(A)(viii)
to say:
The term âpayroll costsâ--
(I) means [the sum of]--
(aa) the sum of payments of any compensation with
respect to employees . . . ; and
(bb) the sum of payments of any compensation to or in-
come of a sole proprietor or independent contractor[.]
But âandâ cannot bear that weight in this statute. Cf. Palomares,
52 F.4th at
649
(Oldham, J., concurring) (âWe do the law a disservice when we suggest
that textualist exegeses are reducible to . . . hyper-literalist readings of the
word and.â). That is for five reasons.
First, as we have explained, the most natural reading reflects that
Congress chose a two-part structure that distributes the word âmeansâ
across (aa) and (bb), providing two separate definitions of âpayroll costsâ for
two different types of applicants. For businesses with traditional payrolls,
subsection (aa) tells it what kinds of outflows it can count. For self-employed
individuals, subsection (bb) tells it what kind of inflows it can count.
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Second, Seville has no theory for what the word âmeansâ does in the
statute. âMeansâ does not denote numerical addition; it provides a defini-
tion. A dictionary will tell you that âirisâ means (1) the goddess of the rain-
bow in the Iliad, (2) a rainbow, (3) âa rainbowlike play of colors,â (4) part of
the eyeball, (5) a notable asteroid in the asteroid belt, (6) a type of flower,
(7) a âcolor, reddish-blue in hue,â (8) a type of quartz, (9) a filmmaking
device, (10) a photography device, and (11) a part of a butterfly. Iris,
Websterâs Second at 1310. But that is not to say that âirisâ means the
summation, addition, or total of a goddess, a rainbow, an asteroid, a flower, a
filmmaking device, a butterfly, &c. Multiple definitions instead communicate
that a phrase has different meanings in different situations. So too here.
Third, Congress knew how to say âthe sum of â in the CARES Act
when it wanted to. The first example is staring us in the face: Subsections (aa)
and (bb) both tell applicants to calculate âthe sum of â their elements. The
CARES Act is chock full of other examples. For example, look at
15 U.S.C.
§ 636
(a)(36)(E)(i)(I). There, Congress directed that a PPP borrowerâs
maximum loan amount be calculated as âthe sum of â items (aa) (payroll
costs multiplied by 2.5) and (bb) (existing disaster-relief loan balance).
Similarly, the maximum loan amount for a farmer or rancher without employ-
ees is calculated as âthe sum of â items (aa) (2019 monthly gross income mul-
tiplied by 2.5) and (bb) (existing disaster-relief loan balance).
Id.
§ 636(a)(36)(V)(ii)(I). And Congress specified the PPP loan forgiveness
amount would be calculated as the âthe sum of â a list of enumerated
expenses. Id. § 636m(b)(1)â(8). Try as it might, Seville cannot write the
words âthe sum of â into § 636(a)(36)(A)(viii)(I), which instead states only
that âpayroll costsâ âmeansâ (aa) and (bb). That omission shows borrowers
are not supposed to sum up (aa) and (bb).
Fourth, if Congress wanted businesses to sum the elements of (aa)
with the elements of (bb), why break subsection (I) into (aa) and (bb) at all?
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To communicate that meaning, the more natural organization would have
been a single list of items constituting âpayroll costsââincluding employee
payroll and payments to independent contractorsâthat every applicant
(whether a business or self-employed individual) could add to its sum if
applicable. Such a list would not need to repeat the phrases âwage,â
âcommission,â and âsimilar compensationâ across subsections (aa) and
(bb). Nor would it cap payments to employees and independent-contractor
income in two separate sections, even though the cap is the same amount.
Compare id. § 636(a)(36)(A)(viii)(II)(aa) (capping payroll costs attributed to
the âcompensation of an individual employeeâ at $100,000), with id.
§ 636(a)(36)(A)(viii)(I)(bb) (capping payroll costs countable by self-
employed applicants at $100,000). Sevilleâs interpretation explains none of
this.
Fifth and finally, Sevilleâs reading creates a âdouble dippingâ prob-
lem. Seville Indus.,
2024 WL 697592
, at *6. No one disputes that both small
businesses and independent contractors could apply for PPP loans on their
own. See
15 U.S.C. § 636
(a)(36)(D)(i), (ii). But if both applied and small
businesses could count in their âpayroll costsâ what they paid to independ-
ent contractors, that would âpermit[] small businesses and their contractors
to count the same amounts twice to obtain multiple loans.â Seville Indus.,
2024 WL 697592
, at *6. There is no principled reason to think Congress
meant to double count money spent on independent contractors, especially
in a statute that is otherwise rigorous about avoiding duplication. See
15
U.S.C. § 636
(a)(36)(A)(viii)(II)(dd), (ee) (excluding from payroll costs sick
and family leave wages that are already entitled to tax credits);
id.
§ 636(a)(36)(G)(i)(IV) (requiring PPP loan applicants to certify that they
have ânot received amounts under this subsection for the same purpose and
duplicative of amountsâ already âapplied for or receivedâ).
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No. 24-30170
Seville argues that § 636(a)(36)(G)(i)(IV) solves its double dipping
problem because it stops a small business and an independent contractor
from borrowing based on the same payments. Not so. This provision requires
each applicant to certify that it has not received a PPP loan already, not that
no one else has. But even if the provision did apply in the way Seville
contends, then a small businessâs loan based on what it paid to independent
contractors would prevent those independent contractors from getting their
own loans. That would be absurd: It would mean independent contractors
would get no funds at all. No interpretation could be more âillogical,â Jones,
599 U.S. at 480
, or make less sense of the CARES Act.
In short, the statutory text, structure, and context all foreclose
Sevilleâs reading of the CARES Act.
III
We also reject Sevilleâs two other claims.
First, Seville claims the IFR changed the meaning of âpayroll costs.â
It did not; the term always excluded payments to independent contractors.
The IFR was an interpretive rule that merely âadvise[d] the public of the
agencyâs construction of the statutes and rules which it administers.â Perez
v. Mortg. Bankers Assân,
575 U.S. 92, 97
(2015) (quotation omitted). So the
SBAâs decision not to forgive Sevilleâs loan is âno more retroactive in its
operation than is a judicial determination construing and applying a statute
to a case in hand.â Manhattan Gen. Equip. Co. v. Commâr of Internal Revenue,
297 U.S. 129, 135
(1936).
Second, Sevilleâs equitable estoppel claim fails too. As an initial mat-
ter, Seville did not bring this claim in its complaint, so it was forfeited.
Regardless, even assuming equitable estoppel could run against the Govern-
ment, see Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc.,
467 U.S. 51,
60
(1984) (leaving the issue open); Knapp v. U.S. Depât of Agric.,
796 F.3d
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445, 461 (5th Cir. 2015) (same), âclaims for estoppelâ against the Govern-
ment âcannot be entertained where public money is at stake,â Off. of Person-
nel Mgmt. v. Richmond,
496 U.S. 414, 427
(1990). But even if it could bring an
equitable estoppel claim, Seville has not come close to showing âaffirmative
misconduct by the [G]overnment.â Knapp,
796 F.3d at 461
. Rather, it just
disagrees (incorrectly) with the SBA about the meaning of âpayroll costs.â
And it is far from clear that receiving a $1.5 million loan at 1 percent inter-
estâfar more than Seville was even entitled toâis a âsubstantial injury.â
Ibid.
In any event, the notion that Seville had the rug pulled from under it
is untenable. Consider Sevilleâs PPP application form. It asked Seville to pro-
vide its average monthly payroll and number of employees, and it required
Seville to âcertify in good faithâ that it would âverify[] the number of full-
time equivalent employeesâ on its âpayroll.â ROA.605. It required Seville
to certify that it âunderst[oo]d that loan forgiveness w[ould] be provided for
the sum of documented payroll costs.â
Ibid.
The formâs instructions listed
what expenses could be included in payroll costs, and it provided a different
list âfor an independent contractor or sole proprietor.â ROA.606. Nowhere
did this form indicate that Seville could count what it paid to independent
contractors.
* * *
A careful, commonsense reading of the CARES Act shows that
Congressâs design for the PPP was clear: âPayroll costsâ do not include pay-
ments that small businesses made to independent contractors. The statute
made low-interest loans available during the pandemic for small businesses
to maintain their payrolls and for independent contractors to make up lost
income. On the front end, Seville improperly counted its payments to
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No. 24-30170
independent contractors and borrowed too much money. Come forgiveness
season, only the loans based on genuine payroll costs shall be redeemed.
AFFIRMED.
20Case Information
- Court
- 5th Cir.
- Decision Date
- July 15, 2025
- Status
- Precedential