On April 2, the Small Business Administration (SBA) issued an “interim final rule” to the effect that business must have 500 or fewer employees and fall below the SBA’s small business size standards in order to qualify for the Paycheck Protection Program. Congress, however, declared that the program shall be open to all business that have 500 or fewer employees or fall below those standards. Over the weekend, AGC of America alerted the Trump Administration to the problem, and late last night the U.S. Department of Treasury released new guidance about the Paycheck Protection Program loans that 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 made a point of reaching out to AGC and notifying the association of its action. Here is a copy of that notice.
While the new Treasury Department guidance appears to clear the way for construction firms that employ 500 or fewer people to qualify for the new Paycheck Protection Program loans, its fix is, at best, procedurally sloppy. AGC will work with the SBA to ensure its regulations and guidance are harmonized with this Treasury guidance.