Small Business Concerns Eligibility

Do “small business concerns” as defined by the U.S. SBA Act need to have 500 or fewer employees to be qualified for the PPP?

Businesses with more than 500 employees can still qualify for the PPP if they they meet special size standards for the primary industry in which they operate. Go to www.sba.gov/size for industry size standards for small businesses.

Also, a business can qualify for a PPP loan as a small business concern if it meets the below test:

maximum tangible net worth of the business is not more than $15 million; and
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.

A business that does indeed qualify as a small business concern must truthfully attest to its eligibility, otherwise it will be ineligible.

Linked here and pasted below is the text from the official question and answer document published by the Department of the Treasury on April 10, 2020, which you should reference:

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

Below is the official question from Q2 as of April 10, 2020

2. Question: Are small business concerns (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) required to have 500 or fewer employees to be eligible borrowers in the PPP?

Below is the official answer from Q2 as of April 10, 2020

Answer: No. Small business concerns 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- 1 This document does not carry the force and effect of law independent of the statute and regulations on which it is based. based size standard corresponding to its primary industry. Go to www.sba.gov/size for the industry size standards. 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. A business that qualifies as a small business concern under section 3 of the Small Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the Borrower Application Form, unless otherwise ineligible.

You just learned about: Small Business Concerns Eligibility

For more information, check out this related resource: Funding a Business

Do you have a topic suggestion?

We are working rapidly to update our resources and content. Send feedback to let us know!