Q: To determine borrower eligibility under the 500-employee or other applicable threshold for First Draw PPP Loans, or the 300-employee threshold for Second Draw PPP Loans established by the Economic Aid Act, must a borrower count all employees or only full-time equivalent employees?

A: For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees.

By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.

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

Article ID: 2426, Created: April 27, 2020 at 12:19 PM, Modified: March 31 at 9:04 AM

SBA / Treasury FAQ – 36. To determine borrower eligibility under the 500-employee or other applicable threshold ..., or the 300-employee threshold...,must a borrower count all employees or only full-time equivalent employees?

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