For the purposes of loan forgiveness, no. Information issued Friday on how to calculate maximum loan amounts includes questions and answers directed toward: Self-employed individuals with no employees. 13 C.F.R. By clicking "continue" and using this site, you acknowledge that you have read and understand this message. This website is not a lender and does not broker loans, make loans or make any credit decisions. It does not matter whether control is exercised, so long as the power to control exists. The CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.”. The SBA will not reduce a borrower’s loan forgiveness amount if an employee voluntarily requested and received a reduction of their hours during the borrower’s loan forgiveness covered period. 7010 made to the PPP loan forgiveness requirements, as well as guidance on advance purchases of PPP loans. See our Advertiser Disclosure for more information on how we try to connect you with a Paycheck Protection Program (PPP) lender or other small business lenders. The SBA counts full-time, part-time and temporary employees toward the average number of small business employees, including those of any affiliate businesses. A covered loan will have a maximum maturity of 5 years from the date on which a borrower applies for loan forgiveness under Sec. Number of employees is the average number of people employed for each pay period during the 12 most recent months. Businesses with more than 500 employees in certain industries also can apply for loans, according to the SBA and Treasury. Affiliation arises when there is an identity of interest between close relatives with identical or substantially, identical business or economic interests (such as where the close relatives operate concerns in the same or similar industry in the same geographic area). This includes employees obtained from a temporary employee agency, professional employer organization, or leasing business. | Insights The SBA does not look only at full-time employees. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees. By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “fulltime equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions. It does not matter whether control is exercised, so long as the power to control exists. The SBA has two main standards for business size – fewer than 500 employees for manufacturing and mining industries, and under $7.5 million in average annual receipts for non-manufacturing industries. Lender PPP Loan Number: Enter the loan number assigned to the PPP loan by the Lender. This includes employees obtained from a temporary employee agency, professional employee organization or leasing concern. | CARES Act | Regulatory/Policy Issues, Published April 1, 2020 | Updated April 6, 2020. As a result of the worldwide pandemic caused by COVID-19, these Acts have greatly expanded access to two important disaster relief programs to be administered under the SBA, the Economic Injury Disaster Loan (“EIDL”) and the newly created Paycheck Protection Program Loan (“PPP Loan”). SBA loans are made through banks, credit unions and other lenders who partner with the SBA. The method used by the SBA for determining a business' size based on number of employees includes the following principles: SBA’s size standards govern whether a business is eligible for loans administered by the SBA, such as the EIDL, PPP Loan, and other Business Loan programs under 7(a), 7(m), and 504 (“other Business Loan programs”). (The list doesn’t include the thousands of … However, SBA will not give present effect to: agreements that are open or merely continue negotiations about a possible merger; Affiliation arises where the CEO or President of the applicant concern (or other officers, managing members, or partners who control the management of the concern) also controls the management of one or more other concerns. The average number of employees of the business is used based upon numbers of employees for each of the pay periods for the preceding completed 12 calendar months. Under the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to provide up to a 90 percent guarantee in order to strengthen access to capital for small businesses after credit froze in 2008. Business concerns owned and controlled by Indian Tribes, Alaska Native Corporations (ANCs) organized pursuant to the Alaska Native Claims Settlement Act, Native Hawaiian Organizations (NHOs), Community Development Corporations (CDCs) or wholly-owned entities of Indian Tribes, ANCs, NHOs, or CDCs are not considered affiliates of such entities. Borrowers need to have excellent credit and strong financials that demonstrate their ability to repay the loan. $1000 per employee up to $10,000 max.” 2. 80a–1, et seq. Request this number from the These size standards are set forth in. Small Business Advice (or "SBA®" or SBA.com®") offers business advice, information and other services related to the formation, financing, operation and management of businesses. The U.S. Small Business Administration ’s (the U.S. SBA) PPP loans are generally only available to businesses with fewer than 500 employees. There are of course exceptions, so you’ll want to check with the … See our Advertiser Disclosure. Part-time and temporary employees are counted the same as full-time employees. individuals’, concerns’, or other entities’ ability to divest all or part of their ownership in order to avoid a finding of affiliation. “Close relatives” is defined as a spouse, parent, child, sibling or spouse of any such person. Question: To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees? In calculating the number of employees to meet this employee limit, a business must include the employees of any companies that it is “affiliated” with under the U.S. SBA’s rules. All businesses with fewer than 500 employees which are assigned a NAICS code beginning with 72 (Accommodations and Food Services) as of the date the PPP Loan is disbursed; Any business operating as a franchise that is assigned a franchise identifier code by SBA; and. If SBA determines that affiliation exists, then SBA will count the number of employees for the business whose size is at issue combined with the number of employees for all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. employees, both Company A and Company B are deemed to have 600 employees and would not be eligible for a PPP loan, unless they were in an industry for … Business concerns which are part of an SBA-approved pool of concerns for a joint program of research and development or for defense production as authorized by the Small Business Act are not affiliates of one another because of the pool. 13 C.F.R. The SBA’s affiliation rules may require a business to count employees of an affiliate business towards the employee cap for SBA loans. By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “fulltime equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions. ... SBA PPP Loan Number: Enter the loan number assigned by SBA at the time of loan approval. Stock options, convertible securities and agreements to merge, Identity of interest between individuals or businesses, including family members. You have reached SBA.com®. Affiliation may be found in either case for other reasons as set forth in this section. The average number of employees of a business with affiliates is calculated by adding the average number of employees of the business with the average number of employees of each affiliate. Lender PPP Loan Number: Ask your lender for the number they assigned to the PPP loan. 1141j), are not considered affiliated with the cooperative by virtue of their membership in the cooperative. Employee benefit or pension plans established and maintained by the Federal government or any state, or their political subdivisions, or any agency or instrumentality thereof, for the benefit of employees; Employee benefit or pension plans within the meaning of the Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. SBA signaled that it will issue additional revisions to its interim final rules on loan forgiveness and loan review procedures to address changes H.R. On April 14, 2020, the SBA issued an update further clarifying that: To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. Corporations, pass-through entities, independent contractors, and self employed individuals are all eligible for a PPP loan. In determining a business’ number of employees, SBA counts all individuals employed on a full-time, part-time, or other basis. Reiterates that the last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020. The Small Business Administration defines "small" based on revenue and number of employees. Business concerns owned in whole or substantial part by investment companies licensed, or development companies  qualifying, under the Small Business Investment Act of 1958, as amended, are not considered affiliates of such investment companies or development companies. If no individual, concern, or entity is found to control, SBA will deem the Board of Directors or President or Chief Executive Officer (CEO) (or other officers, managing members, or partners who control the management of the concern) to be in control of the concern. By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “full time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions. The agency shall evaluate the offer in the same manner as other offers with due consideration of the capabilities of the subcontractors. Department of Labor Issues Q&A on Paid Sick Leave and FMLA Included in Families First Coronavirus Response Act. The SBA does not look only at full-time employees. The size of the applicant combined with its affiliates must not exceed the size standard designated for either the primary industry of the applicant alone or the primary industry of the applicant and its affiliates, whichever is higher. Alabama Department of Revenue Announces Sales Tax Relief for Small Businesses, COVID-19: Top Questions & Answers for Employers, What Counts Towards 500? | Authored Article Control may be affirmative or negative. The unpublished version of the update ensures full forgiveness for self-employed, freelancers and independent contractors who took the maximum loan amount based on 2.5 times their 2019 monthly income. ); and. Below is the official question from Q36 as of May 14, 2020. SBA will deem a minority shareholder to be in control, if that individual or entity has the ability, under the concern's charter, by-laws, or shareholder's agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders. Under the SBA regulations, affiliation exists when one business controls or has power to control the other, or a third party controls or has the power to control both. Venture capital operating companies, as defined in the U.S. Department of Labor regulations found at 29 CFR 2510.3–101(d); A firm that has an SBA–approved mentor-protégé agreement authorized under 13 CRF 124.520 or 13 CRF 125.9 of this chapter is not affiliated with its mentor firm solely because the protégé firm receives assistance from the mentor under the agreement. Enter the loan number assigned by SBA at the time of loan approval. For financial, management or technical assistance under the Small Business Investment Act of 1958, as amended, an applicant is not affiliated with the investors listed in paragraphs (b)(5)(i) through (vi) of this section. In addition, affiliation will not be found based upon the performance of common administrative services so long as adequate payment is provided for those services. D. The employees of a former affiliate are not counted if affiliation ceased before the date used for determining size. (a) In determining a concern's number of employees, SBA counts all individuals employed on a full-time, part-time, or other basis. The SBA has also created a religious exemption to the affiliation rules for certain faith-based organizations. SBA treats such options, convertible securities, and agreements as though the rights granted have been exercised. 1001, et seq. When determining if a business has fewer than 500 employees, the SBA considers the average number of employees for each pay period for the preceding 12 months. The SBA uses the number of employees to define business size for publishers of newspapers, books, greeting cards, and other non-internet informational items. Here are some of the most common types of SBA loans: 504 loan. The SBA’s affiliation rules may require a business to count employees of an affiliate business towards the employee cap for SBA loans. 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