The SBA Paycheck Protection Program aims to help companies survive by providing a direct incentive to keep employees on the payroll during the Covid-19 crisis. Qualifying staffing firms need to act fast if they are interested in taking part.

Companies jumped on the first tranche in early March, which provided $349 billion in funding, but that was used up within two weeks. A supplemental $310 billion tranche is now available; however, $175 billion of which had been allocated as of May 3.

“This is certainly something they should act quickly upon,” says Nick Florio, founder of Strategic Staffing Consultants. Florio was also a partner at accounting firm Citrin Cooperman & Co. LLP, where he served for 30 years.

PPP loans have a maturity of two years and an interest rate of 1%. The government will forgive the loans if a company’s employees are kept on payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. However, at least 75% of the forgiven amount must have been used for payroll. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease.

Payroll is a staffing firm’s biggest expense, so the loan program is a natural fit for staffing firms, Florio says.

One potential pitfall is if a firm significantly contracts and risks having the loan not forgiven. However, the 1% interest rate is low and the PPP loans don’t require personal guarantees or personal or corporate collateral — making it, relatively inexpensive money, Florio says.

Loan Amount

The loans allow companies to borrow 2.5 times their average monthly payroll or $10 million — whichever is lower. However, for highly paid employees, compensation above $100,000 per employee must be excluded.

Loans are also set up for firms with 500 or fewer employees. However, there are alternate guidelines that would include companies with a headcount of up to 10,000 under the Small Business Administration Alternate Size Standard. According to Florio, it requires a firm to have a maximum tangible net worth of not more than $15 million and average net income after federal taxes of not more than $5 million for the past two full fiscal years.


Florio says the PPP loan application comes with affirmations that need to be signed indicating that the firm meets eligibility criteria, meets the “needs” criteria that it has been affected by Covid-19 and meets the affiliation criteria. Affiliation refers to ownership requirements in cases where multiple staffing firms share common ownership.

Staffing firms need the guidance of an accountant or attorney to navigate the PPP loan process, Florio says. Although the loan application is relatively simple, the details in calculating headcount and average payroll are complex. Each situation is also unique.


Martin Borosko, managing member of law firm Becker LLC, noted staffing firms often have questions about eligibility. New guidance in the last two or three weeks has raised some questions about eligibility and whether firms qualify. The bar was low when they were first offered. In fact, some firms, such as Shake Shack, were given loans that they ultimately returned after public criticism arose.

If firms aren’t eligible borrowers, that can create difficulties if they do take the money, he says. The government plans to review all borrowers above $2 million to see if they executed the certificate of eligibility in good faith. If not, that would be akin to getting the PPP loan by fraud. However, the government recently extended the window for companies to return loan money to May 14 from May 7.

Borosko also says some staffing firms had raised questions on the impact of taking a PPP loan on client companies and their ability to borrow PPP funds. Two companies can’t borrow for the same employees and there has been some confusion. However, it’s clear that the best candidate to borrow money is the staffing firm and not the client, he says.

Another Wrinkle

The PPP loans have been a help to staffing firms and keeping people employed who would otherwise not be employed, says Jeremy Bilsky, senior director and general manager, Advance Partners. However, he has seen the forgiveness element of the loans going to top of mind for some staffing firms.

“These loans — if they do have to be repaid, the terms are better than most loans — but staffing firm owners still want to be sure they are able to support the forgiveness,” Bilsky says.

Ensuring compliance in order for the loan to be forgiven also adds another wrinkle for staffing firms, he says. They are dealing with new unwelcome distractions just to remain in business, keep workers safe and handling other new compliance elements such as sick leave under the Coronavirus Aid, Relief and Economic Security Act.

The staffing industry had been in growth mode for the 10 years prior to the Covid-19 crisis, and many, including Bilsky, believe the industry will bounce back once the pandemic ends.

Separately, an SBA disaster loan program for small companies has limited the size of loans, The Washington Post reported. That program is not the same as the PPP.