CoAdvantage- The COVID-19 pandemic has hit American businesses hard. According to the Congressional Budget Office (CBO), the unemployment rate rose from 3.5% in February to 14.7% in April, representing tens of millions of jobs lost, with expectations that the average unemployment rate will remain close to 10% in 2021. And it’s not just the workforce that’s shrinking; the economic losses experienced by retail, restaurants, and other sectors have been staggering.
But not all companies have been equally affected by the pandemic, and the National Association of Professional Employer Organizations (NAPEO) wanted to know if PEOs were providing genuine value to their clients during this crisis period. They examined business performance in PEO clients compared to small businesses at large during the pandemic. Their recently published results were eye-opening.
PEO clients were 119% more likely to have received PPP loans.
It turns out that PEOs have been very successful at helping their clients through this period of extreme difficulty. One of the most apparent ways is by helping clients to apply for and claim emergency funds available through the Paycheck Protection Program (PPP)
These funds were designed to help businesses navigate the economic disruption without downsizing. However, the PPP program turned out to be challenging to apply for and receive funds. PEOs have proved to be a major help in this regard. One PEO client told NAPEO: “I sat down at my computer one morning to request what I would need to get a PPP loan and it was already in my inbox (from my PEO), even before banks were allowed to accept applications… As a result of their service, I could focus on serving my clients.”
Specifically, only an average of 30.1% of small businesses nationwide received PPP loans, while fully two-thirds (65.9%) of comparable PEO clients received PPP loans.
PEO clients were 60% less likely to have permanently closed.
The effects of COVID-19 have proven so destructive that many businesses have permanently shuttered. While noting that it is too early to determine final survival rates, NAPEO’s survey did find that as of July 31, 2020, only 0.6% of PEO clients had permanently closed, compared to an average of 1.5% for all small businesses nationwide. There’s a similarly dramatic difference in temporary closures as well: only an average of 1.3% of PEO clients were still temporarily closed compared to 14% of all small businesses.
The NAPEO report suggests that PEOs ability to help clients maneuver through new regulations and figure out ways to reopen safely played a role. As one of NAPEO’s member PEOs said, “We’ve helped our clients in a variety of new ways, with everything from return-to-work procedures and securing personal protective equipment to introducing solutions via mobile applications for contact tracing and office reopening management.”
CoAdvantage is also here for you during this time. For more information about our assistance with COVID-19-related matters, please visit the CDC COVID-19 Resource Center.
As one of the nation’s largest Professional Employer Organizations (PEOs), we help small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create a strategic HR function in your business that drives business growth potential, contact us today.