How PEO Clients Fared When Coronavirus Shut Down the Nation

By Gerald Diddle on Oct 22, 2020
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How PEO Clients Fared During the COVID Pandemic

In normal times, professional employer organizations (PEOs) like Axcet help small businesses attract, motivate and retain employees, reduce HR-related expenditures and liabilities and give owners more time to focus on core business.

2020, though, has been anything but “normal”.

PrismHR, a PEO software solutions provider, researched how PEOs helped their small and medium-sized clients through the early, unprecedented stages of the pandemic and the accompanying business shutdown that stretched over several months. The study showed that 69% of PEOs assisted clients with navigating the Coronavirus Aid, Relief, and Economic Security (CARES) Act and 54% of PEOs provided clients with support in seeking Families First Coronavirus Response Act (FFCRA) funding.

RELATED: Five Lesser-Known PEO Services That Can Transform Your Business >>

PEOs’ involvement paid off for their small business clients. New research by the National Association of PEOs and HR analytics firm McBassi & Company evaluated how PEO clients fared in the first months of the coronavirus pandemic. The research compared recent PEO client statistics with national data, including:

  • Small Business Administration data on PPP loans
  • Business registration data
  • Small business data compiled by Opportunity Insights Economic Tracker
  • Data from surveys of small businesses (MetLife/U.S. Chamber of Commerce, Gallup/Wells Fargo)

PPP Loans

PEO clients were more than twice as likely to receive PPP loans, at a rate of 65.9% vs. 30.1% for small businesses as a whole. Further, 49.7% of PEO clients received Round 1 PPP funding, compared to 28.9% for all small businesses.

PEO clients were extraordinarily likely to be approved for PPP funding: 98% of their applications were successful. Notably, these small businesses typically received significant help from PEOs in the PPP process.

RELATED: Five Signs It's Time To Switch To a PEO Solutions Provider >>

Business Closures

PEO clients also were far less likely than other small businesses to remain temporarily or permanently closed as the economy began reopening. By July 2020, only 1.3% of PEO clients remained temporarily closed, as compared to 14% of all small businesses.

And, they closed permanently at less than half the national rate. Just .06% of them had shut down for good by July 2020, while 1.5% of small businesses overall had permanently closed their doors by that time.

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Final Results

So, from a percentage standpoint, compared to other small businesses, PEO clients are:

  • 119% more likely to have received PPP loans.
  • 72% more likely to have received their PPP funding in Round 1.
  • 91% less likely to still be temporarily closed.
  • 60% less likely to be permanently closed.

While the first wave of urgent needs from small and mid-sized businesses is behind us, smaller businesses will continue to face challenges as the recession and COVID-19’s impact continue. As the research shows, PEOs will provide unmatched support as these smaller companies anticipate and respond to the new normal.

RELATED: Post-Pandemic Workplaces Embrace COVID-Induced Changes >>

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Written by Gerald Diddle

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