The Small Business Administration, in consultation with the Treasury Department, released late Monday its first frequently asked questions guidance on the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
SBA and Treasury said they would periodically update the FAQ.
Complaints have been surfacing about the small-business loan process. Bloomberg News reported that the SBA’s loan processing platform crashed Monday and was down for hours, preventing lenders from processing any loans.
The system was back up on Monday afternoon, according to Bloomberg.
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Among the issues addressed in the FAQ: Some businesses with more than 500 employees can also apply for loans.
“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,” the FAQ states.
A business can also qualify for the PPP as a small-business concern if it met both tests in SBA’s “alternative size standard” as of March 27:
(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.
The 18-question FAQ also states that a small-business owner who’s previously pleaded guilty to a felony can also apply for a loan.
The SBA and Treasury explain: “Businesses are only ineligible if an owner of 20% or more of the equity of the applicant is presently incarcerated, on probation, on parole; subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or, within the last five years, for any felony, has been convicted; pleaded guilty; pleaded nolo contendere; been placed on pretrial diversion; or been placed on any form of parole or probation (including probation before judgment).”
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