No Change To PPP for Dealers Submitting with Franchise Identifier Codes

• Any dealership with 500 or fewer employees is eligible to apply for a PPP loan.  However, even if you are a dealer with more than 500 employees, affiliation rules are waived for any business concern operating as a franchise that is assigned a Franchise Identifier Code (FIC) by the SBA. Dealers with more than 500 employees, without FICs, can still apply for a PPP loan but will be subject to the SBA affiliation rules.

• If you are a dealer whose franchise has not yet obtained an FIC, then your business will be considered together with its affiliates for purposes of determining eligibility for the PPP.

• Business concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls of has the power to control both. It does not matter whether control is exercised, so long as the power to control exists.

• The SBA has set forth four tests for affiliation based on control. Affiliation under any of the four circumstances described below is sufficient to establish affiliation for applicants for the PPP.

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

• For details regarding the four tests, see the SBA’s Affiliation Rules Applicable to U.S. Small Business Administration Paycheck Protection Program.

Please see our other alert entitled “Franchise Identifier Codes and Other Information for Your PPP Application” to see if your franchise has been assigned an FIC.

As set forth in our firm’s prior alert by Tal M. Unrad, Bryce W. Donohue, and Paul A. Schmid, more general information on the Affiliation Rules for PPP applications relating to all small businesses concerns can be found here.