SBA / Treasury FAQ – 23. How do the $10 million cap (or $2 million cap for a Second Draw PPP Loan) and affiliation rules work for franchises?

Compliance > CARES Act
Q:  How do the $10 million cap (or $2 million cap for a Second Draw PPP Loan) and affiliation rules work for franchises?
 
A:  If a franchise brand is listed on the SBA Franchise Directory, each of its franchisees that meets the applicable size standard can apply for a PPP loan. (The franchisor does not apply on behalf of its franchisees.) The $10 million cap on First
Draw PPP Loans (or $2 million cap for a Second Draw PPP Loan) is a limit per
franchisee entity, and each franchisee is limited to one First Draw and one Second Draw PPP Loan.

Franchise brands that have been denied listing on the Directory because of affiliation between franchisor and franchisee may request listing to receive PPP loans. SBA will not apply affiliation rules to a franchise brand requesting listing on the Directory to participate in the PPP, but SBA will confirm that the brand is otherwise eligible for listing on the Directory.
 
 

This Q&A was based on information contained in the Treasury Department’s March 12, 2021, version of “Paycheck Protection Program Loans, Frequently Asked Questions,” which is updated from time to time.  This CARES Act / SBA / PPP related issuance may be found here:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

 

 

 

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