Information provided by Laurie Bassi and Dan McMurrer McBassi & Company. Transcription provided by NAPEO
All of the PPP program’s original $349 billion was allocated between April 3 and April 16, 2020. An expansion of the program added more than $300 billion in additional funding. Applications for this second round of PPP loans reopened on April 27, finally closing on August 8, 2020. Most of the initial loans went to larger businesses, while most of the smallest loans (71.1 percent of all PPP loans under $350,000) were funded in the second round.3 We collected multiple specific examples of PEOs working to guide clients through the PPP loan application process, including producing and providing the necessary documentation and employee-related data. PEOs have continued to work with clients throughout the process, including ensuring that clients use the loan proceeds according to changing federal guidelines on what is necessary to receive loan forgiveness.
PEO clients were significantly more likely to receive PPP loans than comparable small businesses, and more likely to receive their loans earlier.
PEO guidance enabled many PEO clients to receive and benefit from their loans before many other comparable small businesses. (Almost half of all small businesses applying for PPP loans reported in June that the PPP loan was “critical” to their survival)
115,000
The average success rate among PEOs for their clients who applied for PPP loans was 97.8 percent. This extremely high rate indicates that virtually all of PEOs’ clients’ PPP loan applications were successful
Long-term business survival represents the most critical indicator of success for any business in the wake of the massive economic disruption due to the COVID-19 pandemic. Because the pandemic was continuing at the time this white paper was written, it is not yet possible to assess its final impact on businesses,16 nor on the impact of PEOs on their clients’ ultimate rates of survival.17 While we cannot yet answer questions about final business survival rates, we do have some limited interim data we can assess on the percentage of businesses that have already permanently closed. An August 2020 survey of NAPEO member PEOs found that 0.6 percent of all PEO clients had permanently closed as of July 31, 2020.18 This compares to a national average of approximately 1.5 percent of all small businesses having permanently closed due to the pandemic.
Business Survival Rates
Many businesses that remained open saw demand drop precipitously. These factors threatened the very existence of many businesses, with small businesses disproportionately affected. Thus, long-term business survival represents the most critical indicator of success for any business in the wake of the massive economic disruption due to the COVID-19 pandemic. Because the pandemic was continuing at the time this white paper was written, it is not yet possible to assess its final impact on businesses,16 nor on the impact of PEOs on their clients’ ultimate rates of survival.17 While we cannot yet answer questions about final business survival rates, we do have some limited interim data we can assess on the percentage of businesses that have already permanently closed.
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