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Is an employer with 500 or more employees eligible to apply for a loan under the Paycheck Protection Program?

Posted by Bonita Hatchett-Bodle

Apr 16, 2020 1:05:19 PM

Yes. The Small Business Administration (SBA) clarified that program eligibility is not limited to small businesses with fewer than 500 employees. Instead, small businesses with more than 500 employees are eligible to participate, as long as they satisfy the existing statutory and regulatory definition of a “small business concern” under Section 3 of the Small Business Act, 15 U.S.C. 632, which imposes size standards for different industries. Additionally, a business can qualify as a small business concern if it meets both of the following tests in the SBA’s “alternative size standard” as of March 27, 2020:

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Topics: Small Business Administration, Paycheck Protection Program

Do the SBA affiliation rules apply in determining employer eligibility under the Paycheck Protection Program?

Posted by Bonita Hatchett-Bodle

Apr 16, 2020 1:02:26 PM

The Small Business Administration (SBA) size regulations are used to determine whether an organization is eligible for participation in the SBA’s programs. The rules require that an organization’s affiliates be included in determining whether the business has 500 or fewer employees. Affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Under the rules, control may arise through ownership, management, or other relationships or interactions between the parties. The affiliation rules do apply under the program but lenders are not required to make an independent determination regarding applicability of the SBA affiliation rules under 13 C.F.R. 121.301(f). Instead, it is the responsibility of the borrower to determine which entities (if any) are its affiliates and to determine the employee headcount of the borrower and its affiliates. Lenders are permitted to rely on the borrowers’ certifications.

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Topics: Small Business Administration, Paycheck Protection Program

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