Today the SBA released additional guidance on how to count the employees of foreign affiliates. Previously, the SBA had issued guidance in the form of FAQ #44 that stated that you needed to count all U.S. and non-U.S. employees of domestic and foreign affiliates when counting employees towards the Paycheck Protection Program (PPP) size eligibility standards. This had caused significant confusion taken in conjunction with previous guidance that suggested a business need only count U.S.-resident employees.

Today’s guidance confirms the FAQ #44 ruling that you must count all U.S. and non-U.S. employees of domestic and foreign affiliates towards the size eligibility standards, but provides a safe harbor for borrowers that counted only U.S. employees and who applied for the PPP prior to May 5, 2020. “SBA will not find any borrower that applied for a PPP loan prior to May 5, 2020 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. Such borrowers shall not be deemed to have made an inaccurate certification of eligibility solely on that basis. Under no circumstances may PPP funds be used to support non-U.S. workers or operations.”