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.
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)
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.
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.
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.