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Paycheck Protection Program (PPP) – Can I be ineligible even if I meet the requirements?

Paycheck Protection Program (PPP) Eligibility Requirements

You are eligible if you are:

  • A small business with fewer than 500 employees
  • A small business that otherwise meets the SBA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An individual who operates as a sole proprietor
  • An individual who operates as an independent contractor
  • An individual who is self-employed who regularly carries on any trade or business
  • A Tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organization that meets the SBA size standard

Check out the SBA table of size standards here.

In addition, some special rules may make you eligible:

  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis.
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company, the normal affiliation rules do not apply.

 REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.

You are ineligible for a Paycheck Protection Program (PPP) loan if, for example:

  • You are engaged in any activity that is illegal under federal, state, or local law.
  • You are a household employer (individuals who employ household employees such as nannies or housekeepers).
    • The Administrator, in consultation with the Secretary of the Treasury, determined that household employers are ineligible because they are not businesses.
  • An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony within the last five years.
  • You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government.

How do I determine if I am ineligible for the Paycheck Protection Program (PPP)?

Businesses that are not eligible for Paycheck Protection Program (PPP) loans are identified in 13 CFR 120.110 and described further in SBA’s Standard Operating Procedure (SOP) 50 10, Subpart B, Chapter 2, except that nonprofit organizations authorized under the Act are eligible. (SOP 50 10 can be found here.)

Other Paycheck Protection Program (PPP) Resources:

For a top line overview of the program, click here.

If you’re a borrower, more information can be found here.

The application for borrowers can be found here.

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