As a result of fierce construction industry objections to the Small Business Administration’s (SBA) interim final rule adding a second requirement for construction companies seeking a Paycheck Protection Program loan, the Treasury Department quickly issued new guidance that should clear the way for contractors seeking loan applications.
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. However, in passing the Coronavirus Aid, Relief and Economic Security (CARES) Act, Congress declared that the program would be open to all businesses that have 500 or fewer employees or fall below those standards.
The Associated General Contractors of America (AGC) quickly alerted the Trump Administration to the problem, and late on April 6, the U.S. Department of Treasury released new guidance about the loan program. It indicates in addition to small business concerns, a business is eligible for a Paycheck Protection Program 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).
It goes on to state 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 made a point of reaching out to AGC and notifying the association of its action.
While the new 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,” the AGC states. The association plans to continue to work with the SBA to ensure its regulations and guidance are harmonized with this Treasury guidance.
Learn more about these and other developments related to the Paycheck Protection Program.