Who Is Eligible?

Generally, businesses who employ fewer than 500 employees are eligible for the loan.  In addition, a business is eligible if it is a restaurant, hotel, or a business that falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and where each of the locations has 500 employees or fewer. Tribal businesses, 501(c)(19) veteran organizations, sole proprietors, self-employed workers, independent contractors, and 501(c)(3) nonprofits, including religious organizations, will be eligible for the program. Nonprofit organizations are subject to SBA’s affiliation standards.

Notably, businesses in certain industries may be eligible for the loan if they have more than 500 employees in the event that the business meets the SBA’s established size standards. (Section 1102 (a)(D)(i)(II)“(II) If applicable, the size standard in number of employees established by the Administration for industry in which the business concern...operates")  Eligibility under this section references section 121.201 of the Code of Federal Regulations which sets forth a chart under the North American Industry Classification Code (NAICS Code) to determine if a particular industry is “employee based” or “receipts based.” (13 C.F.R. §121.201)  The Table is included by reference and through a hyperlink here, for convenience as it is approximately forty six (46) pages in length.

Individuals who are familiar with the SBA’s loan programs will likely ask about affiliation standards.  For purposes of the Act, the affiliation rules are waived for businesses with 500 employees or fewer that operate under the NAICS Code section 72.  The Act similarly provides that businesses which operate under NAICS Code 72 are eligible if they have less fewer than 500 employees per physical location.  The SBA intends to promptly issue additional guidance with regard to the applicability of affiliation rules. 

Notably, “household” employers, meaning individuals who employ household employees such as housekeepers, are not eligible for this loan as the SBA Administrator and Secretary of the Treasury have determined that “household” employers are ineligible because they are not a business.

Eligibility may be effected in the event that the borrower attempts to obtain a PPP loan in addition to an EIDL through the SBA for the same purposes.  An entity may be eligible for both an Economic Injury Disaster Loan (EIDL) and a Small Business Interruption Loan (SBIL) at the same time.  However, the entity cannot simultaneously apply for the funds to be used for the same purpose under both programs.  By way of example only, if a business needed $10,000 for payroll costs, it could not apply for the $10,000 EIDL for payroll as well as the SBIL for the same $10,000 payroll costs.  Notably, there is some ambiguity regarding the ability to obtain both a PPP and EIDL when the EIDL was not related to COVID-19.  If a business received an EIDL loan related to COVID 19 between January 31, 2020 and April 3, 2020 the business should contact their lender to determine if they can refinance the EIDL into a PPP for purposes of loan forgiveness.

SBA Information on Paycheck Protection Plan

Click the links below to view the updates directly from the Small Business Administration (SBA), or keep reading the summary below.