A judge in federal Bankruptcy Court in Albuquerque has ruled the U.S. Small Business Administration acted outside its authority by requiring the Archdiocese of Santa Fe to certify it was not involved in a bankruptcy proceeding in order to qualify for a low-interest loan from a program aimed at helping nonprofits and small businesses affected by the novel coronavirus.
Judge David T. Thuma wrote earlier this month the SBA should act on the application from the archdiocese “without regard to Plaintiff’s status as a Chapter 11 debtor.”
The judge added that if the SBA’s actions were the cause of the archdiocese losing its requested $900,000 loan, the archdiocese could sue for damages.
The archdiocese had filed a complaint against the SBA in late April, arguing the agency was overstepping by requiring applicants to certify they weren’t in bankruptcy proceedings before they could receive payroll protection loans.
The archdiocese — which filed for bankruptcy in 2018 following a wave of clergy sex abuse lawsuits — argued the federal government specifically ruled nonprofit entities and those in bankruptcy are eligible to receive 1 percent interest loans from the federal Paycheck Protection Program, which is part of the more than $2 trillion federal relief package being disbursed to help steady the economy during the COVID-19 pandemic.
The SBA filed a notice Monday indicating it plans to appeal the ruling.
A spokeswoman for the Archdiocese of Santa Fe did not respond to a phone message Monday seeking information about the number of people it employs and whether those workers were paid during the time emergency orders from the state barred large gatherings, including church services.