Federal Work Study Students Excluded from 500 Employee Headcount for PPP Loan Eligibility

May 8, 2020

On May 5, 2020, the Small Business Administration released favorable guidance which allows education institutions not to count certain student workers as meeting the 500 or fewer employee requirements for eligibility for the Paycheck Protection Loan Program.

While student workers generally count as employees, they do not count for a borrower who is an institution of higher education, as defined in the Department of Education’s Federal Work-Study regulations, if the student worker’s services are performed as part of a Federal Work-Study Program or a substantially similar program of a State or political subdivision of a state. This rule applies for determining the number of employees for PPP loan eligibility, and for the calculation of payroll costs used to determine the PPP loan amount.

This new rule could allow some institutions to qualify for PPP who were previously over the 500 employee limitation when considering student employees participating in Federal Work-Study programs. The regulations are specific about the work that is performed as part of a Work-Study Program. The regulations define a Work-Study Program as the Federal Work-Study Program, the Job Location and Development Program and Work Colleges Programs. Other student employees would continue to be included in the total employee headcount for purposes of PPP loan eligibility and the maximum loan amount.

Educational institutions that previously exceeded the 500 employee limit when counting these students should review their employee count taking into account this new rule. Please let us know if we can help you.

SBA Loan Assistance

Cherry Bekaert is pleased to offer two levels of assistance with the SBA loan application process, as well as PPP loan forgiveness claim consulting and documentation assistance.

Related Resources