A significant number of companies across the U.S. had to make the difficult decision to either temporarily or permanently shut down in response to COVID-19. Fortunately, several contractors were able to take advantage of the Paycheck Protection Program during these difficult times. If the funds are used for payroll, rent, mortgage interest, or utilities, then the Small Business Administration (SBA) will forgive the loans as an incentive for keeping workers on the payroll for eight weeks. Here are the ways that PPP is being used in the construction industry, along with some other important considerations.

  • Contractors can leverage PPP to maintain their current workforce and salary levels during and after coronavirus. Construction was deemed to be essential service during the pandemic in a majority of states allowing work to continue on critical infrastructure like housing construction, healthcare, schools, improvements to roads, bridges, etc.
  • Small construction businesses that had to lay off employees can use the PPP to quickly rehire them back. Unfortunately, the industry lost 975,000 jobs between March and April. The Northeast was the hardest hit region where over 50% of firms either terminated or furloughed employees. New York instituted stringent executive shut-down orders through the pandemic, and even threatened to fine project teams up to $10,000 if they were found working on nonessential construction projects.

Eligibility Concerns

There has been some confusion regarding eligibility and the PPP application process. Contractors and legal experts are still trying to translate all of the elements contained in the program, especially when it comes to calculating eligibility according to number of employees. For instance, many construction firms were unsure if they had to account for employees both foreign and domestic, and the answer was yes. Still, some contractors could be misled into believing that they qualify for the program by their lending institutions. That’s why it’s so important for all entities involved to perform due diligence before applying for the PPP. The government plans to audit companies that receive over $2 million and prosecute those that make false claims. Potential penalties include everything from monetary fines to suspension. Here’s a list of steps you can follow to help avoid these penalties:

  1. Confirm that your company meets the size and affiliation limitations set forth by the SBA.
  2. Ensure that all documentation is completed accurately.
  3. Document eligibility by keeping records of lost revenue, lack of liquidity, etc.
  4. Log how the funds are used.
  5. Check SBA for updates on a regular basis.

As construction recruiters, it’s our plan to continue offering our support to contractors from all over the country to provide resources and navigate these unprecedented times.


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