The U.S. Small Business Administration (SBA), in consultation
with the U.S. Department of the Treasury, has provided updated
guidance on how to count employees in foreign affiliates for the
purposes of determining the 500 or fewer employee size standard for
the Paycheck Protection Program (PPP).
In the Interim Final Rule dated April 2, 2020 and in Frequently
Asked Question 3 (FAQ 3) released on April 6, 2020, the SBA
modified the 500 or fewer employee size standard with the
language "whose principal place of residence is in the United
States." This led to an interpretation that after applying the
affiliation rules to obtain an aggregate employee count, the
applicant would then exclude all employees who did not have a
principal residence in the United States and if that final number
was 500 or fewer, then the applicant, if it met all other criteria,
would be an Eligible Borrower for a PPP loan.
