However, the IFR and FAQ 3 further the PPP's purpose of getting wages out to American workers in an emergency and allowing American business operations to continue to exist.
resident employees it has, but that presents a different question.) The IFR Is at Odds with SBA's Underlying Regulations and FAQ 44, but SBA Has Not Amended the IFR, Which Remains as the Governing Regulation for the PPPĪs noted, the IFR and FAQ 3 are contrary to SBA's pre-existing size regulations. (Side note: the amount of the loan a PPP borrower can receive is tied to the number of U.S. As a regulation, it trumps language in guidance (i.e., the FAQs, and FAQ 44 in particular), unless and until the IFR itself is amended. 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.Īs a matter of law, the IFR became part of SBA's regulations as of its effective date. "You are eligible for a PPP loan if you have 500 or fewer employees whose principal place of residence is in the United States, or are a business that operates in a certain industry and meet the applicable SBA employee-based size standards for that industry." residents for purposes of determining their size eligibility for the PPP program. Those documents included language that only require a foreign-owned firm to count its employees who are U.S. However, it is at odds with SBA's IFR under the PPP first issued on April 2, 2020, and which became effective on April 15, 2020, and with previous FAQ guidance, in particular FAQ 3 issued April 7, 2020. 632) on the basis of the employee-based size standard must do the same.įAQ 44 requires the counting of all employees (foreign and domestic) of a concern and its affiliates and is consistent with SBA's underlying regulations governing its size and loan programs (see discussion below). Business concerns seeking to qualify as a "small business concern" under section 3 of the Small Business Act (15 U.S.C. and foreign affiliates, absent a waiver of or an exception to the affiliation rules. affiliates?Īnswer: For purposes of the PPP's 500 or fewer employee size standard, an applicant must count all of its employees and the employees of its U.S. 121.301(f) apply with regard to counting the employees of foreign and U.S. Question: How do SBA's affiliation rules at 13 C.F.R. The FAQ posted May 5, 2020, addresses how foreign-owned companies should calculate their number of employees for purposes of complying with the 500-employee limitation for small business eligibility set forth in the CARES Act. (See Holland & Knight's previous alert, " Paycheck Protection Program: Updated Guidance on Counting Employees in Foreign Affiliates," May 6, 2020.) Small Business Administration's (SBA) Interim Final Rule (IFR) implementing the PPP and to prior FAQ guidance. The latest FAQ guidance, while presenting a correct interpretation of existing federal law, runs contrary to the U.S. For a more detailed summary of the May 18 revisions to the IFR, see Holland & Knight's alert, " New PPP Interim Final Rule Clarifies That Foreign Employees Count for Size."Īs Holland & Knight wrote in an alert on May 6, 2020, the latest Frequently Asked Question (FAQ) for the Coronavirus Aid, Relief, and Economic Security Act (Act) Paycheck Protection Program (PPP) loan eligibility underscores yet another compliance concern for large companies, this time with respect to foreign-based companies. Consistent with the suggestion in Holland & Knight's alert below, the IFR also stated that borrowers who, prior to May 5, 2020, relied on a previous version of the IFR that excluded foreign employees from the size calculation would not be deemed ineligible for PPP loans. Department of the Treasury on May 18, 2020, issued a revised Interim Final Rule (IFR), which clarified that Paycheck Protection Program (PPP) borrowers must count all employees - domestic and foreign - when calculating their size for determining eligibility under the PPP's 500-employee threshold. Small Business Administration and the U.S.
0 kommentar(er)
