PPP loans for multiple affiliated entities

Given the current situation, more small businesses than usual have found themselves in need of financial assistance. As a result, the SBA has relaxed affiliation rules regarding PPP loans for their interim rule, but there are still restrictions.

Those with multiple affiliated firms are particularly confused about whether some, all, or none of their businesses qualify for these loans. Fortunately, while there is no single answer, determining whether or not your business qualifies for these loans isn’t too difficult. According to the SBA, “An entity generally is eligible for the PPP if it, combined with its affiliates, is a small business, as defined by section 3 of the Small Business Act (15 U.S.C. 632).”

The most notable qualification of being a small business according to the SBA is having 500 or fewer employees within one’s business. Under affiliation guidelines, a business that is affiliated with other businesses, whether it owns them or vice versa, must have less than 500 employees between all affiliated businesses. The significant exception to this is business in the food service industry who, regardless of affiliation, qualify for PPP loans for each business as long as total employees for each location is lower than 500.

Even if a business, with its affiliates, exceeds 500 employees, some businesses could still be eligible for a PPP Loan through SBA’s applicable size standards using the SBA size standard tool.