On April 6, 2020, the Small Business Administration and the Department of Treasury issued supplemental guidance regarding eligibility under the new Payroll Protection Program, loans that may qualify for debt forgiveness.
The effect of the revised guidance means that it is likely that more staffing firms will be eligible to participate in the program, and, consequently, more staffing firms may be able to benefit from the debt forgiveness provisions.
As of April 16, the SBA has notified Congress that the initial tranche of PPP funds had been obligated. Discussions are ongoing among legislators about allocating additional funds to the PPP program.
Initially, the SBA guidelines limited participation to firms with an employee headcount of fewer than 500 employees. This served to preclude many larger staffing firms from joining what has become a very popular loan program.
The April 6, 2020 update expanded the SBA loan program eligibility, as follows:
“A business can qualify for the Paycheck Protection Program as a small business concern if it met both tests in SBA’s ‘alternative size standard’ as of March 27, 2020: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million.”
Obviously, this guidance potentially opens the door for many more staffing firms to explore whether the program makes sense – be sure to consult your accountant and attorney, as program terms and benefits will vary based on a company’s own unique circumstances.
Below is a link to PPP Frequently Asked Questions:
Paycheck Protection Programs Loans – Frequently Asked Questions