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Loan and Liquidity Opportunities for Businesses Greater than 500 Employees

There has been significant guidance issued centering on small business lending opportunities for businesses with less than 500 employees. Small Business Administration (SBA) programs such as the Paycheck Protection Program (PPP) loan and Economic Injury Disaster Loan (EIDL) have been the major focus of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). However, the CARES Act also has provisions within it to support businesses with greater than 500 employees as well. Within this article, we talk about a few of these options for businesses with greater than 500 employees.

Updated SBA Guidance Expands Eligibility for the Paycheck Protection Program Loans

On April 8, 2020, the SBA updated their Frequently Asked Questions on the PPP loans. Previous guidance on the PPP loans indicated that in order to qualify as a small business, a company would need to have less than 500 employees. However, this is not always the case based on the updated guidance provided.

According to the SBA, 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.” A business can qualify if it meets the SBA employee-based or revenue-based size standards corresponding to its primary industry. A company can use the SBA’s table of small business size standards or the SBA’s size standards tool at–table-size-standards to assess their business size.

In addition, a business can qualify for the PPP loan as a small business concern if it meets both of the following tests in SBA’s “alternative size standard” as of March 27, 2020:

  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.

Companies should note that when calculating the amounts noted above, the SBA considers not only the measure of the applicant, but also that of any affiliates of the applicant.

Requirements and Conditions for Direct Loans from Banks or Other Financial Institutions to Mid-Size Businesses

The CARES Act requires the Treasury Secretary to ask the Federal Reserve to implement a program that provides financing to banks and other lenders that make direct loans to eligible businesses with between 500 and 10,000 employees. The loans are subject to an annualized interest rate that is not higher than 2% and for the first 6 months after any loan is made no principal or interest will be due and payable.

Any eligible borrower applying for a direct loan under this program will need to make a good-faith certification addressing the following:

  • The loan request is necessary to support the ongoing operations of the recipient;
  • The funds will be used to retain at least 90% of the recipient’s workforce, at full compensation and benefits, until September 30, 2020;
  • The recipient intends to restore not less than 90% of the workforce of the recipient that existed as of February 1, 2020;
  • The recipient is a United States business with significant operations and employees located in the United States;
  • The recipient is not a debtor in a bankruptcy proceeding;
  • The recipient will abide by certain dividend and buyback restrictions;
  • The recipient will not outsource or offshore jobs for the term of the loan and 2 years after repaying the loan;
  • The recipient will not abrogate existing collective bargaining agreements for the term of the loan and 2 years after repaying the loan; and
  • The recipient will stay neutral in any union organizing effort for the term of the loan.

McKonly & Asbury will continue to monitor changes and information as it becomes available in these opportunities for businesses greater than 500 employees. If you have any questions regarding this information, please reach out to Danielle Guinter, Principal at McKonly & Asbury at

Continue to check back to McKonly & Asbury’s COVID-19 Resource Center for COVID-19 business related updates.


This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although McKonly & Asbury has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

About the Author

Danielle Guinter

Danielle joined McKonly & Asbury in 2005 and is currently a Partner with the firm as well as the Director of ERISA Services. As a member of the Audit & Assurance Segment, she focuses on providing client services particularly in the a… Read more

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