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SBA Issues Guidance on Student Workers and PPP Loan Eligibility

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The Small Business Administration (SBA) has provided guidance on whether higher education institutions can include student workers when determining the number of employees for purposes of Paycheck Protection Program (PPP) eligibility.

The SBA announced the following in a regulation published on May 5, 2020:

Do student workers count when determining the number of employees for PPP loan eligibility?

Yes, student workers generally count as employees, unless (a) the applicant is an institution of higher education, as defined in the Department of Education’s Federal Work-Study regulations, 34 C.F.R. § 675.2, and (b) the student worker’s services are performed as part of a Federal Work-Study Program (as defined in those regulations1) or a substantially similar program of a State or political subdivision thereof. Institutions of higher education must exclude work study students when determining the number of employees for PPP loan eligibility, and must also exclude payroll costs for work study students from the calculation of payroll costs used to determine their PPP loan amount. [Emphasis added.]

The regulation also notes that “a limited exception for work study is appropriate” to avoid:

  • Preventing some small higher education institutions that provide student financial aid in the form of work study from receiving PPP loans
  • The exclusion of small institutions where the part-time work study headcount is higher than full-time faculty and staff headcounts

Higher education institutions that file PPP loan applications before this regulation was issued are not required to comply with this interpretation, but may rely on it.

Please contact us online or at info@capincrouse.com with questions or to discuss how we can assist your institution.

 


1The Department of Education’s Federal Work-Study Programs described at 34 CFR Part 675 are (1) the Federal Work-Study Program, (2) the Job Location and Development Program, and (3) Work Colleges Program.

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