PEO Clients Fared Better During First Months of COVID-19 Pandemic

A recent study by McBassi & Company found that clients of Professional Employer Organizations (PEOs) had better business outcomes during the first few months of the COVID-19 pandemic than comparable companies not outsourcing to a PEO. Here’s what they discovered.

Areas in Which PEO Clients Fared Better Than Comparable Businesses During Pandemic

While COVID-19 is still cycling and leaving its mark worldwide, researchers explored the impact of PEOs during the first few months of the pandemic by looking at three primary areas:

  1. Paycheck Protection Program (PPP) loans
  2. Current business status
  3. Business survival

After comparing data, the study found that PEO clients fared better in each respective area than their non-outsourcing counterparts, often significantly better.

Impact of PEOs with PPP Loans

In March of 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act created the PPP program to give qualifying companies forgivable loans to keep their employees paid and to cover business expenses such as rent and utilities. With its urgency in passing, there were many confusing and unclear elements to the Act. However, PEOs worked tirelessly to receive the most up-to-date information and guide clients throughout the process. They produced necessary documentation and employee data to assist with the PPP loan application, even as federal guidelines changed and continued to change for loan forgiveness.

In the end, PEO clients were more than twice as likely to receive PPP Loans than comparable small businesses, which data suggests being a central factor in helping companies stay in business. Further, the success rate for PEO clients who applied for PPP loans was 97.8%, an extremely high rate that indicates nearly all clients’ loan applications were successful.

Impact of PEOs Regarding Clients’ Business Status

While many companies were shut down due to location and/or industry regulations during the early stages of the pandemic, nearly all businesses had been allowed to reopen by late summer 2020 with capacity restrictions and safety requirements.

From their research, McBassi & Company found PEO clients were far more likely to be open than comparable businesses. “This finding likely reflects the key role of PEOs as knowledgeable partners positioned to help clients maneuver through the numerous new regulations necessary before being able to reopen safely for business.”

Impact of PEOs Regarding Clients’ Business Survival

Going one step further, the study analyzed business closures to determine long-term business survival. While the pandemic continues to wreak havoc, researchers found that 0.6% of all PEO clients had permanently closed as of July 31, 2020, compared to a national average of 1.5% of all small businesses.

Although this data must be interpreted with caution, it suggests that PEO clients are better positioned for business survival than small businesses overall, perhaps due to their help with PPP loans and having the PEO as an additional source of business guidance.

Additional Ways Stratus.hr Has Helped Clients During the Pandemic

While helping clients with PPP loan applications has been significant, Stratus.hr also helped guide and assist clients throughout the pandemic in the following ways:

  • Began a Coronavirus-specific page on its website
  • Implemented virtual meetings and trainings to protect clients and employees
  • Provided clients with a customized handbook for proper return-to-work procedures
  • Conducted both client- and employee-focused webinars to address FAQs
  • Developed an eFMLA tool for affected employees to apply online for qualifying emergency paid sick and/or family medical leave
  • Advised on employee paycheck and employer tax deferrals
  • Created an easy-to-use survey for clients to click and receive accurate data for PPP loan forgiveness
  • Provided ongoing guidance and advice to help with regulation changes, discrimination concerns, and layoffs and furloughs

Now more than ever, companies need help navigating through a time of so much uncertainty. Let our Stratus.hr experts help guide you through all the complexities and keep your business moving forward.

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Sher Shields

Author Sher Shields

With an MBA and an HR background, Sher helps with all sorts of marketing odds and ends such as articles, newsletters, emails, blogs, website content, ads, and more. When not juggling her four young children, Sher enjoys volleyball, basketball, racquetball, or anything else with "ball" at the end.

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