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You are here: Home / Economy / How PEOs Helped Businesses During the Pandemic

How PEOs Helped Businesses During the Pandemic

August 31, 2022 By Planned Growth

The Covid-19 pandemic has been a trying time for everyone, affecting nearly every person and business imaginable. From serious health issues, to worker shortages, to product shortages, it is clear that many people and industries will forever be changed after this unfortunate era. Many companies suffered serious revenue losses during the pandemic, or were forced to close or downsize their operations. However, businesses that partnered with PEOs had an advantage over others for a few key reasons, and are still thriving despite these hard times.

In efforts to prevent or minimize negative effects of the pandemic businesses, PEOs helped to make some difficult decisions for companies. Some of these decisions included whether to implement layoffs, and allocating labor and resources for the short- and long-term. In addition, PEOs provided support with payroll processing, employee benefits, leave administration, and helped companies apply for PPP loans.

PEOs aided business greatly during this time in three main areas: business operations, changes in employment, and helping to access government support programs.

Business Operations 

By partnering with a PEO, you can reduce cash flow issues and improve business operations. This was quite evident during the Covid-19 pandemic, as businesses who had partnered with PEOs generally had less closures than businesses who had not.

A NAPEO (National Association of Professional Employer Organizations) study found that PEO clients were 58% less likely to go out of business during the pandemic when compared with similar small businesses. These clients were also 22% less likely to report that the pandemic negatively impacted their business.

While closure rates as a whole have not been as bad as initially feared, only 1.1 percent of PEO clients active in January 2020 had closed permanently by December 2020, in the heat of the pandemic, and this rate has only improved over the last few years. The overall rate for all small businesses is 2.6 percent, a significant difference.

Changes in Employment

For many reasons, employment levels have been a major issue for businesses during  every stage of the Covid-19 pandemic. These affects have been slightly different, yet equally burdensome, in every industry. Many employees were laid off or furloughed, and many businesses reported that it became harder to fill positions due to worker shortages.

The impact has been especially significant for small businesses, with an overall 6 percent decline reported by the middle of 2021. However, for PEO clients of the same size, there was actually an increase of 1 percent between January 2020 and June 2021. This figure likely indicates that PEO clients have attracted employees who were laid off by other businesses. While job losses undoubtedly occurred during the first few months of the pandemic, the rates were lower. This was mitigated by a higher rate of growth in the first half of 2021.

Because PEOs allow small businesses to offer substantially improved benefits over those other small businesses can afford, it becomes easier to attract employees in a market that favors job-seekers. Add to that the improved business operations, and PEO clients are in a much more competitive position when hiring and attracting top talent.

Accessing Government Support Programs 

Many government support programs were put in place to help businesses survive the pandemic. However, many business owners were not fully aware of what benefits were available to them, or how to access them. PEOs were able to help their clients significantly during this time by setting them up with any programs they had access to, and handling the details while clients were able to spend their time running their businesses as usual.


PPP loans are a great example of one way PEOs were able to help businesses. The Paycheck Protection Program (PPP) was one of the most widely-used government programs for businesses during the pandemic. This program allowed businesses in need to access low-interest loans. These loans were then forgiven if the money was used to pay furloughed staff.

During the first round of PPP loans, 65.9% of PEO clients received a loan, compared to 30.1% of other businesses. PEO clients were 119% more likely to receive a PPP loan in 2020. In 2021 there was a second round of loans, and 30.5% of PEO clients received one compared to 17.8% of other businesses.

PEOs helped by making sure their clients were aware of the assistance they were eligible for and by investing their time and effort to apply for benefits. They also helped clients achieve loan forgiveness. 81.2% of PEO clients that received loans in 2020 had received loan forgiveness by July 2021, compared to 68.8% of other businesses.

Continued Benefits 

Although we hope for the world’s continued healing, and that no more sicknesses and viruses lead us to another chaotic pandemic amongst us, the advantages of partnering with a PEO were certainly highlighted during this trying time. It has become abundantly clear that there are significant benefits to partnering with a PEO that extend beyond the pandemic’s reach. These benefits include, but are not limited to:

  • Access to less expensive workers’ comp (thanks to benefiting from the PEO’s experience rate modifier) and healthcare premiums.
  • More time for HR to work on company culture and mediate between employees.
  • Improved compliance with employment laws at local, state, and federal levels.

All of these benefits help keep your company thriving when things are easy. But when you hit tough business times, whether global or specific to your business, a PEO becomes essential. Partnering with a PEO is the best HR outsourcing solution for businesses through good times and bad. In good times and bad, PEOs have proven to be trustworthy partners to help make critical decisions and allow businesses to maintain and thrive.

While unavoidable setbacks such as the Covid-19 pandemic continue to present new and ongoing challenges, a quality certified PEO such as BRG Advisory Group can help your business through uncertainty by recommending ways to reduce risks, save money, and prepare your business for what’s ahead. Call us today at 800-971-3006 or fill out our online form to find out how BRG Advisory Group can help you through any adversity!

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