How has PEO assisted businesses during the pandemic?

When the COVID-19 pandemic hit, business owners were left struggling to stay afloat. Some companies were temporarily closed, and others were forced to close their doors permanently. Many employers struggled with tough decisions about the management of remote workers, how to meet payroll, whether they could afford to keep their doors open, and how to navigate the constantly changing protocol for employees.

A recent survey by the National Association of Professional Employer Organizations (NAPEO) found that employers who partnered with a PEO (Professional Employer Organization) fared better than other small businesses because they had a team of experts in their corner to help them navigate the tidal wave of the pandemic. A PEO partners with small and mid-size businesses to provide comprehensive human resources services, including payroll, tax administration, benefits, regulatory compliance, and workers’ compensation.

Here’s how PEOs helped small businesses overcome difficulties during the pandemic.

Summary of Statistics:

The following statistics were recorded from 2020-2021, during the height of the COVID-19 Pandemic. According to NAPEO:

  • PEO clients are 58% less likely to close permanently.
  • 32% are less likely to see a negative affect on business.
  • 71% of businesses were more likely to receive PPP loans, with 18% likely to have PPP loans forgiven.
  • Most PEO clients saw a 1% employment increase compared to a 6% decline for non-PEO small businesses.
  • 82% of PEO clients are more likely to have business operations return to normal.

For more PEO statistics, check out https://www.napeo.org/.

Getting a PPP Loan

One of the biggest plans created to support small businesses during the COVID-19 pandemic was the Paycheck Protection Program (PPP) loan program. The PPP program was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 to provide financing to small businesses adversely impacted by the pandemic. The loans were designed to provide a direct incentive for businesses so they could maintain their critical operations, keep their workers on the payroll, and weather the storm of the effects of COVID-19 without downsizing. The PPP loan was rolled out very quickly, which led to confusion related to:

  • the criteria for eligibility
  • a convoluted application process, and
  • obscurity around how the proceeds must be used to receive loan forgiveness.

It turns out that PEOs were able to help most of their clients apply for and claim PPP loans faster than comparable small businesses. According to NAPEO, PEO clients were 119% more likely to have received Paycheck Protection Program loans and 72% more likely to have received their loans earlier.

  • About 98% of PPP loan applications made by PEO clients were successful.
  • Small businesses in a co-employment relationship with PEOs were more than twice as likely to receive the loan.
  • An average of 65.9% of PEO clients received PPP loans, while only an average of 30.1% of comparable small businesses nationwide received the loan.
  • 97.8% of PEOs’ clients’ loan applications were successful. This success rate was much higher than that of comparable small businesses.

PEOs guided their clients through the application process, including organizing and providing required documentation and data. The PEOs also continued to guide clients throughout the process to ensure the federal guidelines for PPP loan forgiveness were adhered to.

PEOs and the Pandemic – Staying Open with a PEO

The effects of the pandemic have proven so detrimental that many businesses have permanently closed. Whether a business stayed open or closed during the early months of the COVID-19 pandemic was based on its ability to adjust to new circumstances and meet new requirements related to safety, public health, and other related considerations.

NAPEO’s survey did find that 1.3% of PEO clients were temporarily closed as of July 2020 compared to 14% of all small businesses nationwide. There’s a similarly significant difference in permanent closures: only 0.6% of permanent closures were reported by PEO clients during the same time compared to a national rate of 1.5% of small businesses.

The ability of PEOs to help their clients navigate the numerous new regulations and prepare to reopen safely for business played a significant role. PEO clients got top-tier assistance with everything from securing personal protective equipment, developing return-to-work procedures, navigating new HR-related issues, introducing solutions for office reopening management, and minimizing impacts on furloughed employees. PEOs also provided backup to help with the challenges of a remote workforce.

Staying on Top of Regulatory Changes

In the early days of the pandemic, overwhelming information, policies, and regulatory requirements were mounted on business owners. And it sometimes seemed like regulation requirements were changing every week. It took a lot of research, time, and effort to dive into legal jargon, figure out which regulations affect their specific type of business, and stay on top of new legislation. Small business owners partnering with PEOs got assistance with compliances issues in areas like:

  • FFCRA reporting
  • Health regulations
  • Emergency sick leave requirement
  • OSHA and CDC guidance for coronavirus protection
  • Vaccination recommendations

By using a PEO, companies can stay focused on running their business and keeping it afloat.

PEO Solutions and the Pandemic – Managing a Remote Workforce

The COVID-19 pandemic forced many people to work from home and changed the way companies operate. Applying in-office techniques to a remote team can prove to be inefficient or ineffective. PEOs helped their clients put in place structures to keep the business afloat, ensure remote worker productivity, and keep customers happy. This came in the form of:

  • Remote onboarding
  • Training employees to use new tools
  • Integrating additional communication best practices
  • Developing employee handbook
  • Communicating about changes in the workforce
  • Choosing software that keeps workers and managers connected
  • Employee termination guidance
  • Streamlining HR tasks

Let Vested HR Help You Grow Your Business

There’s still a long road to recovery and Vested HR takes pride in offering our clients the support they need to navigate through the choppy waters of the pandemic and continue to grow into the future. As a leading PEO company in Florida, we help small to mid-size companies with benefits, HR administration, compliance, payroll, and workers’ compensation. Contact us today to learn more about PEOs and the pandemic and how we’ve helped businesses through the COVID-19 crisis and how we can help drive your company’s growth potential.