American Rescue Plan Act Expands PPP Eligibility - Modifies Loan Forgiveness and Adds Funding for Online Publishers, Restaurants and Shuttered Venues
President Biden recently signed the American Rescue Plan Act of 2021, which adds an additional $15 billion in new funding for Economic Injury Disaster Loan grants, expands PPP for nonprofit organizations, online news publishers, restaurants, shuttered venues and modifies loan forgiveness rules.
501(c) entities, other than 501(c)(3), (4), (6) or (19), that are exempt from taxation under 501(a) (“Additional Nonprofits”) are eligible to receive first draw PPP loans if Additional Nonprofits:
Employ no more than 300 employees per physical location;
Do not receive more than 15% of its receipts from lobbying activities;
Lobbying activities must not comprise more than 15% of total activities; and
The cost of the lobbying activities for the most recent tax year ending prior to February 15, 2020, must not exceed $1 million.
Additional Nonprofits are also eligible to receive second draw PPP loans if they meet the revenue reduction and size criteria. Note that Additional Nonprofits do not include entities that would be ineligible if they were businesses instead of nonprofits.
501(c)(3) organizations that employ not more than 500 employees per physical location are now eligible for first draw PPP loans.
Online News Publishers
Internet-only news or periodical publishers, or organizations that are majority owned or controlled by such, are now eligible to receive first and second PPP loans if:
They employ no more than 500 employees per physical location or meet the NAICS size standard; and
Certify in good faith that proceeds of the loan will be used to support expenses at the component of the business concern or organization that supports local or regional news.
Restaurant Revitalization Fund
Eligible restaurants may receive a tax-free federal grants from the Restaurant Revitalization Fund equal to the amount of its pandemic-related revenue loss for the period from February 15, 2020 to December 31, 2020, if the following applies:
The applicant is not a publicly traded company and does not own or operate, together with any affiliated business, more than 20 locations as of March 13, 2020. An affiliated business has an equity or right to profit distribution of 50% or more, or has contractual authority to control the direction of the business, established as of March 13, 2020;
A good faith certification that the uncertainty of current economic conditions makes it necessary to request the grant to support ongoing operations and the applicant has not applied for or received a “Shuttered Venues Operators” grant;
The total grant amount for eligible businesses and any affiliated businesses is capped at $10 million and $5 million per physical location. The grant may be spent on eligible expenses, i.e. payroll, principal or interest on mortgage obligations, rent, utilities, maintenance, supplies, food and beverage inventory, operational expenses, paid sick leave, etc.
Shuttered Venue Operators
Grants for Shuttered Venue Operators (“SVO”) were established on December 27, 2020 under the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“Economic Aid Act”). To receive a SVO Grant a business must, among other considerations, be:
Defined as a live venue operator/promoter; a theatrical producer; a live performing arts organization operator, a “relevant” museum operator; a motion picture theater operator; or a talent representative under the Economic Aid Act; and
Not be a publicly traded corporation, or majority-owned by a publicly traded corporation or have received more than 10% of its 2019 gross revenue from the federal government; and
Have been fully operational on February 29, 2020 and experienced a reduction in its gross earned revenue by at least 25% during one calendar quarter in 2020 compared to the same quarter in 2019; and
The SVO Grant recipient has or intends to resume its respective operations.
There are additional specific operational and venue requirements depending on the types of eligible individuals or entities that require analysis in the event an individual or entity seeks an SVO Grant.
Under the Economic Aid Act SVOs could not access both PPP and SVO Grants, this has been amended in the American Rescue Plan Act and a PPP recipient may now also apply for an SVO grant.
PPP loan forgiveness is expanded to include payments made for premiums on behalf of individuals who qualify for COBRA health insurance continuation coverage. The expansion applies only with respect to loan forgiveness applications received after March 10, 2021.
The full American Rescue Plan Act can be found here.