Paycheck Protection Program – Guidance on Affiliation Rules

April 6, 2020

On April 3, 2020, the Small Business Administration (“SBA”) provided guidance regarding the affiliation rules applicable to the Paycheck Protection Program (the “PPP”), which was created as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). There are four affiliation tests that assist in determining the eligibility of the applicant and the amount of loan funds available to the applicant.

The four affiliation tests are:

  1. affiliation based on ownership;
  2. affiliation arising under stock options, convertible securities, and agreements to merge;
  3. affiliation based on management; and
  4. affiliation based on identity of interest.

For more information on the PPP, please see our article SBA Loan Programs Under the CARES Act.

Affiliation Rules:–affiliation-rules-paycheck-protection-program