Payroll Protection Program Update: Entities with Foreign Employees

Date   May 19, 2020

The CARES Act created the Paycheck Protection Program (“PPP”), which amended the Small Business Act (“SBA”) to provide short term loans to companies with fewer than 500 employees and other companies (such as those in the restaurant and hospitality industry). Such loans may be eligible for full forgiveness if used for payroll and other business expenses and all other statutory requirements are met. The SBA continues to issue guidance on a rolling basis, which can impact a company’s eligibility for the loan, use of the loan, and the level of forgiveness
Entities with Foreign Employees Guidance
On May 18, 2020, the SBA posted an interim final rule mandating that foreign employees and employees of foreign affiliates must be included in employee headcount for purposes of determining PPP loan eligibility based on size. However, the SBA provided a safe harbor for borrowers who applied for a PPP loan prior to May 5, 2020. These borrowers will not be found to be ineligible based on the borrower’s exclusion of non-U.S. employees from the borrower’s calculation of its employee headcount if the borrower (together with its affiliates) had no more than 500 employees whose principal place of residence is in the United States. This comes on the heels of a May 5, 2020, FAQ stating that: “an applicant must count all of its employees and the employees of its U.S and foreign affiliates, absent a waiver of or an exception to the affiliation rules.” Prior to this FAQ, the SBA issued guidance stating that an entity is eligible for a PPP loan if it has 500 or fewer employees whose principal place of residence is in the United States. The SBA noted that such guidance caused reasonable borrower confusion which necessitated the foregoing safe harbor. The SBA further mandated that under no circumstances may PPP funds be used to support non-U.S. workers or operations.
FordHarrison's PPP team will continue to monitor the release of new guidance and provide such updates on a regular basis as guidance continues to roll out. The following attorneys are members of our PPP team:

•    Bran Noonan, Partner / New York City,
•    Shane Muñoz, Partner / Tampa,
•    Jack Schaedel, Partner / Los Angeles,
•    Becky Kalas, Counsel / Chicago,
•    Ryan Stewart, Counsel /Tampa,
•    Matt Luttinger, Associate / West Palm Beach,

If you have any questions regarding this Alert, please contact the authors, Bran Noonan, Partner in our New York City office, and Matt Luttinger, Associate in our West Palm Beach,

FordHarrison is closely monitoring the spread of Coronavirus and associated federal and state legislation and has implemented continuity plans, including the ability to work remotely in a technologically secure environment when necessary, to ensure continuity of our operations and uninterrupted service to our clients. We are following all CDC guidelines and state and local laws as applicable. We are committed to ensuring the health and welfare of our clients, employees, and communities while continuing to provide our clients with the highest quality service. Please see our dedicated Coronavirus Taskforce and Coronavirus – CARES Act pages for the latest FH Legal Alerts and webinars on Coronavirus and workplace-related provisions of the CARES Act, as well as links to governmental and industry-specific resources for employers to obtain additional information and guidance. For more information or to be connected with a Coronavirus Taskforce or CARES Act attorney, please contact