Essintial Enterprise Solutions, LLC v. the United States Small Business Administration

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 25-1367
____________
ESSINTIAL ENTERPRISE SOLUTIONS, LLC
v.
THE UNITED STATES SMALL BUSINESS
ADMINISTRATION;
ADMINISTRATOR UNITED STATES SMALL BUSINESS
ADMINISTRATION;
SECRETARY UNITED STATES DEPARTMENT
OF TREASURY;
THE UNITED STATES OF AMERICA,
Appellants.
____________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(No. 1:22-cv-01507)
District Judge: Honorable Julia K. Munley
____________
Argued: December 3, 2025
Before: CHAGARES, Chief Judge, FREEMAN and BOVE,
Circuit Judges.
(Filed: February 3, 2026)

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____________
Adam C. Jed [ARGUED]
United States Department of Justice
Civil Division
950 Pennsylvania Avenue NW
Washington, DC 20530
Patrick J. Bannon
Michael J. Butler
Office of United States Attorney
Middle District of Pennsylvania
235 North Washington Avenue
P.O. Box 309, Suite 311
Scranton, Pennsylvania 18503
Counsel for Appellants
Bret S. Wacker [ARGUED]
J. Chris White
Clark Hill
1400 Wewatta Street
Suite 550
Denver, Colorado 80202
Danny P. Cerrone, Jr.
Clark Hill
301 Grant Street
Fourteenth Floor
Pittsburgh, Pennsylvania 15219
Cynthia Filipovich
Clark Hill
500 Woodward Avenue
Suite 3500
Detroit, Michigan 48226
Counsel for Appellee

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____________
OPINION OF THE COURT
____________
BOVE, Circuit Judge.
The Small Business Administration (SBA) appeals a
finding that the agency violated the Administrative Procedure
Act by declining to fully forgive a Paycheck Protection
Program loan. The appeal turns on whether the borrower’s
payments to independent contractors were “payroll costs”
under the Program’s statutory definition of that term. The
interpretive question is not a routine ground ball. The District
Court said yes, ruling that payments to independent contractors
were covered. As did another district judge in the Western
District of Louisiana. A district judge in the Eastern District
of Michigan sided with the SBA and said no. So too did two
Circuits. The Third will be the third. So we will reverse.
I.
This case arose out of a $7 million loan issued to
Essintial Enterprise Solutions, LLC through the Paycheck
Protection Program (PPP). Essintial provides staffing and
other services to customers in several industries. We get into
the details below, but the gist is that Essintial sued the SBA
when the SBA refused to forgive the entire loan. The District
Court resolved the parties’ dueling interpretations of the
relevant statutory definition in Essintial’s favor. This appeal
followed.
A.
Following the President’s March 13, 2020 emergency
declaration relating to the COVID-19 pandemic, Congress

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established the PPP in the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, Pub. L. No. 116-136, 134
Stat. 281 (2020). The CARES Act included the PPP, which
“aimed to help small businesses keep workers employed
during the crisis, by providing forgivable, low-interest,
federally guaranteed loans to keep employees on the payroll.”
Seville Indus., L.L.C. v. SBA, 144 F.4th 740, 742 (5th Cir.
2025).1 Eligible applicants could borrow up to $10 million
from a private lender, guaranteed by the SBA, based on a
formula relating to “payroll costs.” See 15 U.S.C.
§ 636(a)(36)(E); see also id. § 636(a)(36)(A)(viii) (defining
“payroll costs”). Borrowers were eligible for loan forgiveness
to the extent loan proceeds were used for specified expenses,
including “payroll costs.” Id. § 636m(b)(1).
The President signed the CARES Act into law on March
27, 2020. The SBA was required to issue implementing
regulations within a mere 15 days. See 15 U.S.C. § 9012. On
April 2, 2020, the SBA published an Interim Final Rule on its
website, not effective until April 15, which differentiated
between types of “payroll costs” for a traditional business with
“employees” and “for an independent contractor or sole
proprietor.” 85 Fed. Reg. at 20813. The Rule confirmed that
independent contractors did not “count as employees” because
contractors “have the ability to apply for a PPP loan on their
own . . . .” Id.
On the same day that the SBA issued the Interim Final
Rule, the lending bank advised Essintial’s principal that “1099
employees are allowed to be included in payroll costs” for
1 Unless otherwise indicated, case quotations omit all internal
citations, quotation marks, footnotes, alterations, and
subsequent history.

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purposes of a PPP loan. A 45. On April 4, 2020, Essintial
applied for a PPP loan in the amount of $7,219,862. Essintial
reported that it had 359 “employees” and calculated the loan
amount based on an “Average Monthly Payroll” of $2,887,945.
Like the Interim Final Rule, the instructions on the application
form differentiated between payroll costs for a traditional
business and “for an independent contractor or sole
proprietor.” A 64.
On April 20, 2020, the bank loaned Essintial
$7,028,800, on a two-year term at 1% interest. When Essintial
sought forgiveness of the loan in January 2021, the company
indicated that it had only 276 “employees” at the time of the
loan application. In the forgiveness application, Essintial
acknowledged that the SBA “may request additional
information for the purposes of evaluating the Borrower’s
eligibility for the PPP loan and for loan forgiveness.” A 75.
The bank agreed to forgive the entire loan, but the SBA opened
a review of that determination later in January 2021.
In June 2021, the SBA notified Essintial that “[t]he loan
documentation does not fully support the disbursed loan
amount” because “ineligible payroll expenses were included in
the calculation of the loan amount: 1099 Contractor costs.” A
81. After some number crunching, the SBA forgave
$3,703,011.60 of the loan. The SBA’s Office of Hearings and
Appeals affirmed the SBA’s determination in May 2022.
B.
In September 2022, Essintial sued the SBA and related
government actors in an effort to recover the unforgiven
aspects of the PPP loan. Essintial contended that the SBA’s
forgiveness decision violated the Administrative Procedure

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Act and argued that the SBA had relied on an improper
retroactive application of the Interim Final Rule.
The District Court granted summary judgment to
Essintial and held that the SBA’s decision was arbitrary and
capricious. See Essintial Enter. Sols., LLC v. SBA, 2024 WL
5248242 (M.D. Pa. 2024). The court ruled that the SBA did
not retroactively apply the Interim Final Rule, but that the SBA
erred by interpreting the definition of “payroll costs” in the
CARES Act to exclude Essintial’s payments to independent
contractors. See id. at *4-9. The SBA timely appealed.
II.
The District Court had jurisdiction under 28 U.S.C.
§ 1331. We have jurisdiction under 28 U.S.C. § 1291.
The Administrative Procedure Act directs courts to set
aside final agency actions that are arbitrary, capricious, or
contrary to law. See 5 U.S.C. § 706(2)(A). We conduct de
novo review of statutory interpretations in support of § 706(2)
analysis and legal conclusions in summary judgment decisions.
See Axalta Coating Sys. LLC v. FAA, 144 F.4th 467, 472 (3d
Cir. 2025); see also Jorjani v. N.J. Inst. of Tech., 151 F.4th 135,
140 n.5 (3d Cir. 2025).
III.
We hold that the SBA’s interpretation of “payroll costs”
under the CARES Act did not violate the Administrative
Procedure Act.
Reasonable minds could differ on this one, and some
already have. Compare Veltor Underground, LLC v. SBA, 143
F.4th 727 (6th Cir. 2025), and Seville Indus., 144 F.4th at 742,
with Essintial, 2024 WL 5248242, and Seville Indus. LLC v.

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SBA, 2024 WL 697592 (W.D. La. 2024). But in our view, the
CARES Act included two alternative definitions of “payroll
costs.” 15 U.S.C. § 636(a)(36)(A)(viii)(I). The term “means”
one of two things depending on the type of borrower. Id. The
two options are set forth in subsections (aa) and (bb) of the
definition. Subsection (aa) defines payroll costs for a
traditional business that has “employees.” Subsection (bb)
defines payroll costs for “a sole proprietor or independent
contractor,” and it does not cover Essintial’s payments to such
a contractor. While this interpretation of
§ 636(a)(36)(A)(viii)(I) is not the only option, it is the single,
best meaning based on the statutory text and structure.
A.
“[S]tatutes, no matter how impenetrable, do—in fact,
must—have a single, best meaning.” Loper Bright Enters. v.
Raimondo, 603 U.S. 369, 400 (2024). “The words on the page,
not the intent of any legislator, go through bicameralism and
presentment and become law.” United States v. Safehouse, 985
F.3d 225, 239 (3d Cir. 2021). Statutes resulting from this
process “are the law.” Travers v. Fed. Express Corp., 8 F.4th
198, 202 n.9 (3d Cir. 2021). Thus, “every statute’s meaning is
fixed at the time of enactment . . . .” Wis. Cent. Ltd v. United
States, 585 U.S. 274, 284 (2018).
Experience teaches that a statute’s fixed meaning is not
obvious in every instance. For example, questions can pop up
about the meaning of statutory text when
“new applications . . . arise in light of changes in the world.”
Wis. Cent., 585 U.S. at 284. When that happens, “even if a
word can bear more than one meaning, it is the best ordinary
reading of a statute we seek.” United States v. Johnman, 948
F.3d 612, 618 n.6 (3d Cir. 2020). That is, we look to the
“ordinary, contemporary, common” public meaning of the

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words at issue at the time the law was passed. Perrin v. United
States, 444 U.S. 37, 42 (1979); see also Lopez v. AG, 49 F.4th
231, 234 n.4 (3d Cir. 2022). Identifying a disputed term’s
single, best meaning in the context of a justiciable controversy
is one of our main jobs.
The District Court deviated from that task in modest but
noteworthy ways that contributed to an erroneous conclusion.
Despite acknowledging that Loper Bright overruled Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984), the District Court fixated at times on “whether
or not [the] statute is ambiguous,” including based on “case law
interpreting the first step of Chevron.” Essintial, 2024 WL
5248242, at *5 n.7. Loper Bright laid to rest the “Snark hunt”
for ambiguity. 603 U.S. at 437 (Gorsuch, J., concurring); see
also id. at 407-08 (explaining that the “defining feature” of
Chevron was “the identification of statutory
ambiguity . . . [b]ut the concept of ambiguity has always
evaded meaningful definition”).
The District Court also operated under the related
misimpression that, in the absence of a specified ambiguity in
the statutory definition, the court “need not refer” to “various
statutory sections” cited by the SBA outside of the statutory
definition. Essintial, 2024 WL 5248242, at *9. The scope and
application of “payroll costs” was plainly subject to a
reasonable dispute between the parties here. And
“interpretation of a phrase of uncertain reach is not confined to
a single sentence when the text of the whole statute gives
instruction as to its meaning.” Star Athletica, L.L.C. v. Varsity
Brands, Inc., 580 U.S. 405, 414 (2017). Consequently, it was
error to confine the SBA’s arguments about other relevant
features of the CARES Act to a footnote without analysis. See
Essintial, 2024 WL 5248242, at *9 n.9. In fact, those

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arguments are among the contentions that convince us that the
SBA is correct about the definition of “payroll costs.”
B.
Turning to that definition, Congress used two
subsections to create alternative meanings of “payroll costs.”
15 U.S.C. § 636(a)(36)(A)(viii)(I). Subsection (aa) addresses
types of compensation provided by a business like Essintial to
“employees,” and subsection (bb) addresses compensation
provided by—not paid to—a “sole proprietor or independent
contractor.” Id. The best reading of the definition is that
neither subsection covers Essintial’s payments to independent
contractors.
For ease of reference, the definition looks like this:
(viii) the term “payroll costs”—
(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;

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(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
Id.
Section 636(a)(36)(A)(viii)(I) tells us what “payroll
costs” “means.” Words preceding the em-dash that follows
“means” distribute to subsections (aa) “and” (bb). See Seville
Indus., 144 F.4th at 746 (citing United States v. Palomares, 52
F.4th 640, 650 (5th Cir. 2022) (Oldham, J., concurring)); see
also United States v. Pace, 48 F.4th 741, 754 (7th Cir. 2022);
Johnman, 948 F.3d at 618 (“[W]ords are to be given the
meaning that proper grammar and usage would assign them.”).
Payroll costs “means” one thing for a business with
“employees.” 15 U.S.C. § 636(a)(36)(A)(viii)(I)(aa). And
another thing for “a sole proprietor or independent contractor.”
Id. § 636(a)(36)(A)(viii)(I)(bb). The phrase “the sum of

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payments” introduces each subsection and required the
borrower to add up the different types of compensation covered
by the applicable subsection. Id. § 636(a)(36)(A)(viii)(I)(aa),
(bb). Congress could have called for the addition of payments
arguably covered by both subsections by, for example,
inserting “the sum of” between “means” and the em-dash. See
Seville Indus., 144 F.4th at 749. But Congress did not do that.
Thus, “[t]he payment universes do not overlap.” Veltor
Underground, 143 F.4th at 733.
Close examination of subsection (bb) further
demonstrates that this part of the “payroll costs” definition
cannot be invoked by Essintial. The payroll costs that
Congress specified in subsection (bb)—“a wage, commission,
income, net earnings from self-employment”—are types of
compensation that “sole proprietors and independent
contractors obtain from (or reinvest into) their businesses.”
Veltor Underground, 143 F.4th at 731; see also Seville Indus.,
144 F.4th at 746 (“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.”).
This is “clear enough” with respect to “income” and “net
earnings from self-employment.” Veltor Underground, 143
F.4th at 732. “Only what one gets can be described as ‘income’
or ‘net earnings from self-employment,’ not what one gives.”
Id.
Things are admittedly murkier with respect to the
“wage” and “commission” examples, which also appear in
subsection (aa). We make sense of the overlap by reference to
neighboring terms. See Veltor Underground, 143 F.4th at 734-
35. When situated next to “income” and “net earnings from
self-employment,” as in subsection (bb), we interpret the
words “wage” and “commission” to refer to additional types of

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payments made by “a sole proprietor or independent
contractor.” See id. at 733 (“A business no more pays its
contractors a wage or a commission when it purchases services
than a business’s customers pay the business’s employees a
salary when they purchase goods.”).
In subsection (aa) on the other hand, “wage” and
“commission” have a different neighbor, “salary,” which is not
included in subsection (bb). “The difference must have
significance.” Levins v. Healthcare Revenue Recovery Grp.
LLC, 902 F.3d 274, 283 (3d Cir. 2018). Businesses pay
salaries to employees. The same is true of the other examples
in the remainder of the list that accompanies subsection (aa),
such as tips, paid leave, severance, and insurance and
retirement benefits. See 15 U.S.C.
§ 636(a)(36)(A)(viii)(I)(aa)(BB)-(GG). These are additional
types of employee compensation. The salient point here is that
subsections (aa) and (bb) are best read as having a parallel
structure with alternative definitions based on outlays of
“payments and compensation” by the type of borrower at issue.
Subsection (bb) “adopt[s] the perspective of a sole proprietor
or independent contractor and ask[s] how much he pays
himself.” Veltor Underground, 143 F.4th at 733. It does not
cover Essintial’s payments to independent contractors.
There is more support for this interpretation in the
express exclusions from the “payroll costs” definition. See 15
U.S.C. § 636(a)(36)(A)(viii)(II). As relevant here, “any
compensation of an employee whose principal place of
residence is outside of the United States” cannot be included in
a borrower’s payroll costs. Id. § 636(a)(36)(A)(viii)(II)(cc).
This exclusion applies to subsection (aa) by virtue of the
reference to an “employee,” but there is no corresponding
reference to the “sole proprietor or independent contractor”

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language from subsection (bb). Under our interpretation,
“[t]hat makes sense.” Veltor Underground, 143 F.4th at 733.
It would be “freakish” for the CARES Act “to exclude foreign
resident employees but include foreign resident independent
contractors” for purposes of a traditional business calculating
payroll costs. Seville Indus., 144 F.4th at 748.
Zooming out, “[t]he statute as a whole confirms our
interpretation.” Star Athletica, 580 U.S. at 415. The CARES
Act established “[i]ncreased eligibility” for loans. 15 U.S.C.
§ 636(a)(36)(D). In defining the scope of the increase,
Congress used different subsections to differentiate between a
potential borrower that “employs . . . employees,” and
“individuals who operate under a sole proprietorship or as an
independent contractor.” Compare id. § 636(a)(36)(D)(i), with
id. § 636(a)(36)(D)(ii). The distinction and its subsection
structure tracks our interpretation of the alternative definitions
of “payroll costs” in subsections (aa) and (bb).
There is also a telling clue in the CARES Act provisions
relating to loan forgiveness. Congress limited the grace
available to borrowers who reduced the “number of
employees,” or cut those employees’ “salary or wages” by
more than 25%. See Seville Indus., 144 F.4th at 748 (citing 15
U.S.C. §§ 636m(d)(2), 636m(d)(3)(A)); Veltor Underground,
143 F.4th at 734; see also 15 U.S.C. § 636(a)(37)(J)(iv)
(similar forgiveness provisions relating to second-draw PPP
loans). Congress did not want the SBA forgiving loans issued
to borrowers who cut employees because employee retention
was the stated objective of the PPP. There is “no
corresponding limitation for cuts to independent contractors.”
Seville Indus., 144 F.4th at 748. We draw the same inference
as the other Circuits to have reached the question. Because
“[s]ubsection (bb) covers only what a sole proprietor or

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independent contractor pays himself,” “Congress had little
need to worry that he would get a loan and then diminish his
own wages.” Veltor Underground, 143 F.4th at 734.
Finally, our interpretation of “payroll costs” prevents
the absurd scenario where a business and the independent
contractor that the business paid both get PPP loans based on
the same payments. That happened in this case for some of the
payments at issue. The certification required with PPP
applications was not enough to prevent this double dipping
because Essintial was only required to disclose existing
“duplicative” loans obtained by the company, not loans issued
to third parties such as Essintial’s independent contractors. See
15 U.S.C. § 636(a)(36)(G)(i)(IV); see also Veltor
Underground, 143 F.4th at 737 (explaining that the
certification “does not require the recipient to ensure that no
one else has applied for funds that might cover the same
expenses”). “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.” Seville Indus., 144 F.4th at 750.
We agree with the Fifth and Sixth Circuits that Congress did
not embrace duplicative draws on the public fisc in the CARES
Act. This is another reason that, on balance, the SBA has it
right in this case.
C.
In the District Court and this appeal, Essintial presented
forceful arguments in support of the company’s position. We
acknowledge the strength of those contentions but decline to
adopt Essintial’s interpretation of “payroll costs” because it
places too much emphasis on a “hyper-literalist reading[] of
the word and” separating subsections (aa) and (bb).
Palomares, 52 F.4th at 649 (Oldham, J., concurring).

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Essintial correctly notes the presumption in our caselaw
that “and” is used in the conjunctive. See Reese Bros. v. United
States, 447 F.3d 229, 235-36 (3d Cir. 2006). This applies to
the “and” separating subsections (aa) and (bb). The question
remains: “conjunctive of what?” Veltor Underground, 143
F.4th at 736. “[T]he fact that the definition includes both (aa)
and (bb) does not tell us whether (bb) refers [1] to payments a
business makes to sole proprietors and independent contractors
or [2] to payments that sole proprietors and independent
contractors make to themselves.” Id. Essintial’s push for the
first option is based on an “arithmetical” reading of the statute,
where “payroll costs” means “the sum of” the payments
described in subsections (aa) “and” (bb). Seville Indus., 144
F.4th at 748. As noted above, Congress used that phrase to
introduce each subsection—both start with “the sum of
payments of any compensation”—but not the entire definition.
15 U.S.C. § 636(a)(36)(A)(viii)(I) (emphasis added). We lack
authority to insert those words where Essintial would prefer
them, and the placement chosen by Congress does not help
Essintial.
In an effort to put a favorable gloss on the meaning of
“and,” Essintial draws our attention to several other features of
the CARES Act. The company’s arguments have merit, but
they do not carry the day. Focusing on subsection (bb),
Essintial relies on a truncated quotation to argue that “payroll
costs” include “compensation to . . . [an] independent
contractor . . . .” 15 U.S.C. § 636(a)(36)(A)(viii)(I)(bb).
While this isolated language could be interpreted to include the
payments that the SBA rejected, that is not the best reading of
this phrase. Subsection (bb) is confined to specific types of
“compensation”; compensation “that is a wage, commission,
income, net earnings from self-employment,” and other
“similar payments.” Id. (emphasis added). Essintial’s

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payments to independent contractors do not fit within the
ordinary meaning of the words Congress used to restrict the
ordinary meaning of “compensation” in subsection (bb).
In rejecting Essintial’s argument, we also find
significance in the singular form that Congress assigned to
“independent contractor” in subsection (bb). See Seville
Indus., 144 F.4th 747; Veltor Underground, 143 F.4th at 733.
In subsection (aa), the relevant recipients of the compensation
in question are “employees,” plural. In subsection (bb),
however, Congress made a “deliberate” choice to use the
singular form of “independent contractor” because the entire
definition is written from the standpoint of a single potential
borrower with “payroll costs” to be accounted for in the loan
and forgiveness applications. Seville Indus., 144 F.4th at 747.
Essintial also points us to the statutory exclusions from
“payroll costs,” but we have already found one aspect of those
exclusions to support the SBA. See 15 U.S.C.
§ 636(a)(36)(A)(viii)(II). The company pushes forward citing
caselaw applying the expressio unius canon. Essintial
contends that Congress’s failure to explicitly exclude a
business’s payments to independent contractors means that
such payments are impliedly covered by subsection (bb).
Expressio unius, which is “not absolute,” may serve as an
interpretive aid where “Congress includes particular language
in one section of a statute but omits it in another section of the
same Act.” Bartenwerfer v. Buckley, 598 U.S. 69, 78 (2023).
Essintial’s argument is too much of a stretch because it is based
on two omissions rather than one. The omission of payments
to independent contractors from the exclusions is consistent
with the fact that Congress omitted words of sufficient clarity
in subsection (bb) to cover such payments. There was nothing
to exclude. At least nothing Essintial cares about in this appeal.

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The better inference, already noted, is that Congress would
have excluded payments to foreign contractors, as it did for
foreign employees, if subsection (bb) otherwise covered a
traditional business’s payments to independent contractors.
See 15 U.S.C. § 636(a)(36)(A)(viii)(II)(cc).
Moving beyond the definition, Essintial relies on one of
the loan-eligibility provisions of the CARES Act, which
required lenders to consider whether a potential borrower had
paid “employees” or “independent contractors, as reported on
a Form 1099-MISC.” 15 U.S.C. § 636(a)(36)(F)(ii)(II)(bb).
Essintial contends that borrower eligibility considerations
referencing payments to independent contractors would be
“meaningless surplusage” if such payments were not also part
of the “payroll costs” that are relevant to the calculation of the
loan amount and forgiveness. Appellee’s Br. 30. This is
another argument that has some purchase. See Veltor
Underground, 143 F.4th at 738-39 (White, J., concurring). Yet
ultimately it fails to persuade.
Here, again, the singular-plural distinction undercuts
Essintial’s position. Similar to the “payroll costs” definition,
the eligibility provision is written from the vantage point of
payments by a single potential “borrower”—to “employees,”
which also appears in the definition’s subsection (aa), and
“independent contractors,” which does not appear in
subsection (bb). Id. § 636(a)(36)(F)(ii)(II). This parallel
structure is consistent with our interpretation that subsection
(bb) only covers payments received by—not payments made
to—a single independent contractor seeking to participate in
the PPP.
Essintial’s argument is also weakened by the fact that
these provisions serve different ends. The eligibility provision
“simply does not address how payroll costs are determined.”

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Veltor Underground, 143 F.4th at 737. Congress required
private lenders to evaluate eligibility considerations when
deciding whether to issue a PPP loan at all. The threshold
question of eligibility had no bearing on how much should be
loaned or forgiven, which are both a function of an eligible
borrower’s “payroll costs” and governed by distinct
provisions. Compare 15 U.S.C. § 636(a)(36)(F)(ii)(II)
(eligibility), with id. § 636(a)(36)(E) (maximum loan amount),
and id. § 636m(b) (loan forgiveness).
The eligibility considerations reflect anti-fraud
concerns not apparent on the face of the definition of “payroll
costs.” The eligibility-related text indicates that Congress
sought to ensure that PPP loans were not given to new
businesses that were established for the sole purpose of taking
advantage of the Program and its expanded eligibility. See,
e.g., 15 U.S.C. § 636(a)(36)(D) (“Increased eligibility for
certain small businesses and organizations”). We infer this
purpose from the fact that, for purposes of eligibility, Congress
twice referenced payments that could be verified with tax
records; “payroll taxes” for employees and “Form 1099-
MISC” for independent contractors. Id.
§ 636(a)(36)(F)(ii)(II)(bb). These objective considerations
helped “sort the wheat (real businesses, in need of support)
from the chaff (fake businesses, established solely to capitalize
on the program).” Veltor Underground, 143 F.4th at 737.
Thus, while one might wonder why Congress would care about
a business’s payments to independent contractors for purposes
of eligibility but not loan amount, the statute as a whole
provides enough of an answer that any unresolved aspects of
the question do not move the needle to Essintial’s side.

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D.
We are sympathetic to the challenges that the COVID-
19 pandemic created for Essintial and other businesses, but we
do not agree with Essintial that the company was the victim of
a “bait-and-switch” by the government. Appellee’s Br. 17.
As a matter of law, Essintial’s argument does not
address the statutory text and therefore has limited relevance
to our analysis. Essintial did not bring an equitable estoppel
claim in the District Court, and the company has not relied on
equitable estoppel here. Typically, equitable estoppel “will not
lie against the Government as it lies against private litigants,”
and “claims for estoppel cannot be entertained where public
money is at stake.” OPM v. Richmond, 496 U.S. 414, 419, 427
(1990); see also Monongahela Valley Hosp., Inc. v. Sullivan,
945 F.2d 576, 588-89 (3d Cir. 1991); Seville Indus., 144 F.4th
at 750.
Any superficial appeal to the “bait and switch” claim
loses traction upon examination of the record. On April 2,
2020, the lender sent Essintial an email stating that “1099
employees are allowed to be included in payroll costs.” A 45.
On the same day as the email, the SBA posted contrary
guidance on its website in the Interim Final Rule. See 85 Fed.
Reg. at 20814. Essintial submitted the loan application two
days after the conflicting guidance from the lender and the
SBA. Consistent with the Rule, the application instructions
stated that “payroll costs consist of compensation to
employees” as well as a list of other items consistent with
subsection (aa), “and for an independent contractor or sole
proprietor” a list of items consistent with subparagraph (bb).
A 64. Essintial represented that it had 359 “employees” in its
PPP application, and the company did not break out
independent contractors in response to that question.

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We recognize that the Interim Final Rule was not
effective until April 15, 2020, and that the Rule was not
retroactive. The SBA is not asking for retroactive application
or deference to its interpretation, and we afford the Rule neither
of those things. Nevertheless, Essintial cannot successfully
invoke equity after having received a clear indication of the
government’s position prior to the issuance of the loan. Once
these details are brought to the fore, the SBA’s response to
Essintial’s subsequent forgiveness application in 2021 was not
as harsh as Essintial suggests. Certainly not enough to drive a
different interpretation of the statute.
IV.
The text and structure of the CARES Act persuade us
that Essintial’s payments to independent contractors were not
“payroll costs” for purposes of a PPP loan. That is the best
interpretation of the statute. Therefore, the SBA did not violate
the Administrative Procedure Act. Accordingly, we will
reverse and remand for further proceedings consistent with this
opinion.

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