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  • Writer's pictureNick Andriacchi

PPP Loans & Staffing Industry

Several weeks ago, I read a what I considered a major “hit piece” on small staffing firms regarding the use of PPP loans. The piece was so off base that I will not give it any credibility by referencing the name in this post. In a nutshell, the beef was that staffing companies are using the loans to “double-dip” – allocating PPP funds to pay for the contractors’ payroll. Nothing can be further from the truth.

Labor is a major cost on almost every product sold and especially for services rendered. For example, when a manufacturer produces a product, the cost of labor is included in the price of the finished good. When the customer takes delivery of the good and pays the invoice, they also paid for the labor used in production. Can that be considered a "double dip"? Of course not.

The fact is, the economy stopped during the shut-down and staffing companies were hit especially hard. Many staffing companies saw sales drop 50 – 75% immediately as contract employees were let go at record numbers. Not many small companies in any industry could survive with that kind of revenue loss. And those staffers still have a long way to go to fully recover.

Plus, unlike most industries, staffing companies totally rely on labor to generate a profit so when people stop working, they have no other revenue sources to replace it. No finished product in a warehouse they can sell until the economy reopens.

The PPP loans were essential to keep these vital job creators afloat while employees stayed home. And that was a great thing as staffers are on the front lines in helping restart the economy and help these folks reenter the workforce.

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