This update was originally published on the National Council of Nonprofits website on March 8, 2021.
Now is the Best Time to Apply for a PPP Loan
Act by Tuesday, March 9
Through March 9, the Small Business Administration and Paycheck Protection Program lenders are processing loan applications ONLY from --
Nonprofits with fewer than 20 employees;
For-profit businesses with fewer than 20 employees, including “those that have been left behind in previous relief efforts,” like businesses owned by sole proprietors, independent contractors, and self-employed individuals – many of which are owned by women and people of color, non-citizen lawful residents, and individuals with delinquent federal student loans.
This exclusive small-employer PPP processing window is designed to provide more equitable relief to ensure that lenders give smaller employers the attention they need to work their way through the application process. If you think your nonprofit may be eligible for an initial PPP loan or a second draw loan that Congress authorized at the end of 2020, immediately contact a lender. Learn more at SBA.gov. You can still apply after March 9.
Senate Passes $1.9 Trillion COVID Relief Legislation
The Senate passed a revised version of H.R. 1319, the American Rescue Plan Act, by a party-line vote of 50 to 49. The final vote came on Saturday after a 27-hour straight marathon series of votes on amendments and motions. The Senate rejected most of the 35 amendments, including one by Senator Sanders (I-VT) to raise the federal minimum wage to $15/hour, and another by Senator Paul (R-KY) to strip language in the bill (Section 5001) that expands nonprofit access to Paycheck Protection Program loans. The Senate-passed bill now goes back to the House for quick passage, which is expected on Tuesday. Democratic leaders hope to have the bill on the President’s desk before unemployment benefits for 18 million individuals expire on March 14.
Big Picture Details in the American Rescue Plan Act
The Senate-passed version of the American Rescue Plan Act would, among other things, provide additional funding for COVID-19 vaccines, treatment, and testing; approve $1,400 stimulus checks for most taxpayers; increase the child tax credit and earned income tax credit; and extend the tax credit for nonprofits and other employers that provide paid sick leave and paid family and medical leave through September 30, 2021 (the credits are currently set to expire on March 31). The Senate measure also retains House language providing more funding for the Paycheck Protection Program and the Shuttered Venue Operator Grant program, childcare providers, the Corporation for National and Community Service, arts and humanities organizations, food assistance, housing and homelessness prevention, and assistance for nonprofits providing services to survivors of domestic violence and sexual assault.
As for changes the Senate made to the House-passed version, the increase in the federal minimum wage was removed because it violated the Senate budget rules that enabled the Democratic majority to pass the bill by a simple majority. Another major change is that the Senate bill extends unemployment compensation benefits (including relief for reimbursing employers) through Sept. 6, maintains supplemental payments at $300/week (down from $400/week in the House-passed bill), and exempts the first $10,200 in unemployment benefits from income taxes for individuals with total earnings of less than $150,000 per year.
Treatment of Nonprofit Priorities
Below is an updated breakdown of the progress on some of the policy priorities identified in the nonprofit coalition letter to congressional leaders:
Paycheck Protection Program (PPP) Loans. The bill would add $7.25 billion to the program and allow some larger nonprofits to apply for PPP loans for the first time by expanding eligibility to nonprofits with more than 500 employees that operate at multiple locations as long as no more than 500 employees work at any one location. In a win for performing arts nonprofits, the bill would allow them to apply for funds under both the PPP and Shuttered Venue Operators Grants program, although the combined amounts would be limited. Due to Senate rules, Senators were required remove a repeal of a rule that makes some nonprofits ineligible for PPP loans if they are affiliates of national organizations, although the impact on nonprofits is seen as minimal. The bill makes no changes to the PPP Second Draw requirement that gross receipts decline by 25%; nonprofits have sought the repeal of this restriction. The PPP application deadline is still set at March 31; nonprofit organizations, business groups, and accounting professionals continue to press for extending the sunset for several more months to give employers more time to apply.
Federal Unemployment Coverage. The COVID relief package would extend through September 6, 2021 various federal benefits for unemployed workers, including a provision that would prospectively increase the federal coverage of the unemployment costs of reimbursing nonprofits from 50% to 75%. The bill also provides continued coverage for self-employed workers and staff of religious and very small nonprofits. Currently, all of these benefits are scheduled to expire on March 14.
Aid to State, Local, Tribal, and Territorial Governments. The Senate bill would provide $350 billion in aid, but impose new restrictions on how governments may spend the funds. Permissible uses include providing “assistance to households, small businesses, and nonprofits, or aid to impacted industries,” funding government services that were cut due to declines in revenue brought on by the pandemic, and making “necessary investments” in water, sewer, or broadband infrastructure.
Charitable Giving Incentives. Neither the House nor Senate bill includes expansion of charitable deductions, but lawmakers in the House and Senate are planning to introduce legislation this week to increase giving incentives for taxpayers using the standard deduction to financially support the work of charitable organizations in their communities.