Last week, the SBA issued several rounds of frequently asked questions. One of those questions opened up the opportunity for companies with over 500 employees to apply for a Paycheck Protection Program (“PPP”) loan. While the law always provided that a company with more than 500 employees, but less than the average number for companies within their NAICS code were eligible, last week’s frequently asked questions also outlined an alternative size standard. If on March 27, 2020, a company met the following two standards, the company could qualify for a PPP loan:
1) The company’s maximum tangible net worth of the trade or 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.
Keep in mind that when evaluating whether you qualify or not, you have to consider all affiliates of the company and not just aggregate the employees, but also the net worth and net income.
Kenneth R. Cerini, CPA, CFP, FABFA
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.