By Emma Whitford

Law360 (April 24, 2020, 6:00 PM EDT) -- Casinos with fewer than 500 workers can apply for forgivable coronavirus relief loans through the freshly replenished Paycheck Protection Program, according to an interim final rule posted Friday by the Small Business Administration.

The SBA loosened long-standing restrictions on assisting gambling businesses, as President Donald Trump signed a new relief bill that will inject $310 billion into the PPP program. The first $350 billion was exhausted in less than two weeks.

"A business that is otherwise eligible for a PPP loan is not rendered ineligible due to its receipt of legal gaming revenues," the interim rule states.

"On further consideration, the [SBA] administrator, in consultation with the [Treasury] secretary, believes this approach is more consistent with the policy aim of making PPP loans available to a broad segment of U.S. businesses," it continues.

The news is welcome for small tribal casinos. Exclusion from the PPP forced tribes to furlough hundreds of workers and dip into dwindling reserves while their casinos, a primary source of funding for tribal services, remain closed, Midwest tribe members told Law360 earlier this week.

Bryan Newland, chair of the Bay Mills Indian Community in Michigan's Upper Peninsula, said Friday that he is pleased with the new guidelines. He recently furloughed 400 workers from two casinos and pledged to cover their health insurance at least through the end of May. 

"We are happy about the guidelines, and believe that these are consistent with the law and the federal government's trust obligation to Indian tribes," he told Law360 in a statement. "We are going to work to get into the program, and ensure that our tribe has their wages and benefits."

The Flandreau Santee Sioux Tribe of South Dakota sued the SBA on Thursday, accusing the agency of violating the Administrative Procedure Act by initially excluding tribal casinos and lenders from PPP. Two more tribes joined the suit in an amended complaint Friday.

The Coronavirus Aid, Relief, and Economic Security Act signed in March stipulated that any "tribal business concern" with fewer than 500 employees is PPP-eligible, according to the complaint. The SBA's subsequent rule excluding casinos "contravenes the law it purports to implement" in violation of the APA, the complaint said. 

"Clearly we filed this case because we were left out of the first round of funding," Seth Pearman, the Flandreau Santee Sioux's attorney general, told Law360 on Friday. "We should have been approved through the first round. It looks like the second round of funding is going to go very quickly too, so we hope we are able to participate."

An interim SBA rule published April 14 expanded loan eligibility to businesses whose legal gambling revenue did not exceed $1 million in 2019 and comprised less than half of their total revenue that year. But tribes they were still excluded.

That SBA guidance helped "taverns with slot machines," Newland told Law360 earlier this week. "They were aware of the concern of Indian Country and made the deliberate choice to keep us excluded."

American Gaming Association President Bill Miller celebrated the new rule in a Friday statement.

"I'm grateful to President Trump and his administration for recognizing that commercial and tribal gaming industry employees deserve the same support available to other small businesses," he said.

The SBA will resume accepting PPP loan applications on Monday, according to a press release.

"This will ensure that SBA has properly coded the system to account for changes made by the legislation," SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said in a joint statement. 

--Additional reporting by Andrew Kragie. Editing by Haylee Pearl.

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