Other Topics Addressed in the Fourth IFR Eligibility for Businesses Presently in Bankruptcy Proceedings The Fourth IFR clarifies that an applicant is ineligible to receive a PPP loan if the applicant or its owner is or becomes a debtor in a bankruptcy proceeding, either when the application is submitted or at any time before loan disbursement. An applicant that becomes a debtor, or has an owner that becomes a debtor, in a bankruptcy proceeding prior to receiving the PPP loan proceeds, must notify the lender and request cancellation of the application. Failure to do so will be deemed an unauthorized use of PPP funds. Eligibility for Certain Government-Owned Hospitals The Fourth IFR creates an exception for certain government-owned hospitals to be eligible for a PPP loan. [7] To qualify, the hospital must otherwise be eligible to receive a PPP loan as a business concern or nonprofit [8] and must receive less than 50% of its funding from state or local government sources, exclusive of Medicaid.