NECA Secures Fix to Loan Qualifications Working with Congressional Leaders and Trump Administration
NECA is pleased to report that the U.S. Treasury Department released new guidance on April 7, 2020, clarifying that companies with under 500 employees do qualify for loans under the new Paycheck Protection Program (PPP). This change comes after association staff raised concerns with Congressional leaders and officials at the Small Business Administration and the Department of Treasury.
NECA previously reported that the Small Business Administration launched the loan program designed to help small businesses with their payroll and other business operating expenses. It will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees – all with a 100% guarantee from SBA, and all loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.
Under the terms and conditions from SBA, eligible businesses included all small businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for specific industries. This last provision caused some concern and confusion among NECA contractors since SBA typically measures size standards in the construction industry according to a five-year average of annual receipts.
As soon as NECA reviewed the initial guidance governing the PPP, it was clear more guidance was needed for our contractors. NECA took a measured approach and worked with key decision makers on this issue. On the evening of April 7, the U.S. Department of Treasury released its clarifying language, which states that firms with 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, would be eligible.
This new change will give NECA contractors the predictability they need to move forward with the new SBA loan program.