The Treasury Department Clarifies Confusion Concerning PPP Eligibility for Small Businesses

Small businesses are jumping at the opportunity to obtain loans under the Federal Paycheck Protection Program (PPP). The CARES Act provides $349 Billion for PPP loans, and the Trump administration had requested an additional $250 Billion in funding to the support the program. As of April 7, lenders had already lent $70 Billion of the funds committed to the program. However, there was some initial confusion concerning which businesses qualify for PPP loans. Under the SBA’s initial guidance, there was confusion as to whether small businesses needed to have less than 500 employees and meet any applicable revenue caps to be eligible borrowers in the PPP: Treasury Eases Construction Firms’ Path to COVID-19 Paycheck Protection Loans.

This week the Department of the Treasury and the Small Business Administration subsequently clarified that small businesses “can be eligible borrowers even if they have more than 500 employees, 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.  A business can qualify if it meets the SBA employee-based or revenue based size standard corresponding to its primary industry.  Go to for the industry size standards.”  The SBA also noted that “additionally, 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:” Department of Treasury PPP FAQ.

With the revised guidance, more contractors and other small businesses will qualify for PPP loans. Hopefully the Trump administration and Congress will reach an agreement to add $250 Billion in funding to the PPP. If you have not already done so, contact your lender concerning a PPP loan.

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