American Rescue Plan of 2021 Expands Paycheck Protection Program to Additional Nonprofit Entities
President Biden recently signed the $1.9 trillion American Rescue Plan Act of 2021, H.R. 1319 (the “Act”) into law on March 11, 2021. The Act will send aid to millions of Americans still recovering from the global COVID-19 pandemic. The Act modifies certain provisions of the Paycheck Protection Program (“PPP Program”) in a number of ways, including, but not limited to, expanding the eligibility of certain nonprofits to participate in the PPP Program.
Section 5001 (Modifications to Paycheck Protection Program) of the Act amends the PPP Program as follows:
1. Section 5001(a)(1) of the Act expands the eligibility of nonprofits to include a new category termed “additional covered nonprofit entity” – which are nonprofits listed in Section 501(c) of the Internal Revenue Code other than 501(c)(3)s, 501(c)(4)s, 501(c)(6)s, or 501(c)(19)s – to receive an initial PPP Program, provided that:
- The organization does not receive more than 15 percent of receipts from lobbying activities;
- The lobbying activities do not comprise more than 15 percent of activities;
- The cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to February 15, 2020; and
- The organization employs not more than 300 employees.
- Larger nonprofits are now eligible for the PPP Program by striking the application of the Small Business Administration’s (SBA’s) affiliation rules to nonprofits in the CARES Act and looking at the employee headcount at the “per physical location” level of each organization.
- Larger 501(c)(3)s and veterans’ organizations that employ not more than 500 employees per physical location are eligible for the PPP Program.
- Larger 501(c)(6)s, domestic marketing organizations, and “additional covered nonprofit entities” that employ not more than 300 employees per physical location are eligible for the PPP program.
2. Section 5001(a)(2) of the Act makes eligible “additional covered nonprofit entities” for second draw PPP Program loans, provided that such an entity has suffered at least a 25 percent revenue loss and employs not more than 300 employees.
3. Section 5001(b) concerns the eligibility of internet publishing organizations as follows:
- An internet-only news and periodical publisher with more than one physical location is eligible for a PPP loan as long as the business has not more than 500 employees per physical location or otherwise does not exceed the applicable SBA size standard; the organization certifies it is an internet-only news or periodical publisher; and the loan will support locally- or regionally-focused or emergency information.
- Affiliation rules for internet-only news and periodical publishers are waived, as long as such an entity employs no more than 500 employees per physical location or otherwise does not exceed the applicable NAICS size standard.
- The prohibition against publicly-traded internet-only news and periodical publishers from being eligible is waived if such a business certifies that the loan will support locally- or regionally-focused or emergency content.
- Internet-only news and periodical publishers are made eligible for second draw PPP loans, provided that such a business has suffered at least a 25 percent revenue loss and employs not more than 300 employees.
4. Section 5001(d) of the Act increases the PPP Program level from $806.4 billion to $813.7 billion and provides an additional $7.25 billion for the PPP Program to remain available until expended.