Firms with 500 of Fewer Employees Will Now Qualify for Paycheck Protection Program Loans

The Associated General Contractors of America (AGC) recently announced that guidance from the Trump Administration now allows firms with 500 or fewer employees to qualify for the new Paycheck Protection Program Loans. According to Association officials, the administration released this new guidance after AGC raised concerns over the weekend that many firms that employ 500 or fewer employees appeared to be excluded from the program.

“Administration officials have done the right thing and revised their guidance to allow, as Congress intended, for firms that employ 500 or fewer people to qualify for the Paycheck Protection Program loans,” said Stephen E. Sandherr, the Association’s CEO. “This change means the program is now more likely to help smaller firms continue to operate and retain staff.”

On April 2, the Small Business Administration issued an “interim final rule” to the effect that a business must have 500 or fewer employees and fall below the agency’s small business size standards — which, for construction businesses, are generally determined by an average annual income threshold, not number of employees threshold — in order to qualify for the new Paycheck Protection Program. Congress, however, declared that the program shall be open to all businesses that have 500 or fewer employees or fall below those size standards. Over the weekend, AGC alerted the Trump Administration to the problem, and the U.S. Department of Treasury subsequently released new guidance about the Paycheck Protection Program loans that now allows firms with 500 or fewer employees to qualify. Specifically, the new guidance includes the following:

Question: Does my business have to qualify as a small business concern (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?

Answer: No. In addition to small business concerns, a business is eligible for a PPP loan if the business has 500 or fewer employees whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable).

The new guidance also states that “[b]orrowers . . . may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act” and its interim final rule. At the time it posted this guidance, the Treasury Department also notified the association of its action. Read a copy of that notice.