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PPP Loan Expansion under the American Rescue Plan

PPP Loan Expansion under the American Rescue Plan

When the $1.9 trillion American Rescue Plan Act (ARPA) was signed into law by President Biden on March 11, 2021, an additional $7.25 billion was allocated for the Paycheck Protection Program (PPP) for both initial and second draw loans.

Along with the added funding, the program expanded to include more nonprofits and digital media companies. Large nonprofits with multiple locations can now apply for PPP money if each location employs no more than 500 people.

Nonprofits
The types of nonprofit organizations eligible for PPP funds have also expanded - thanks to a new category called “additional covered nonprofit entity.” Nonprofit organizations that fall under Section 501(c)(3) and 501(c)(6) of the Internal Revenue Code are already eligible for PPP funding, but now 501(c)(5) labor organizations, 501(c)(7) social and recreational clubs, and 501(c)(8) fraternal benefit societies are also eligible.

These groups qualify for PPP funding as long as they don’t receive more than 15% of receipts from lobbying activities; lobbying activities don’t compose more than 15% of their activities; the cost of lobbying activities did not exceed $1 million during the most recent tax year that ended prior to February 15, 2020; and they don’t employ more than 300 people.

The below chart demonstrates the limitations by nonprofit type:

Entity type

Employee threshold

Per-physical-location employee threshold

Lobbying limitations

501(c)(3)

500

500

None

501(c)(19)

500

None

None

501(c)(6)

300

None

Lobbying income ≤ 15% of gross receipts

Lobbying activities ≤ 15% of total activities

Lobbying expenses ≤ $1,000,000

All other 501(c)
(other than 501(c)(4))

300

300

Digital Media Companies
Digital media companies that employ no more than 500 people per physical location are also eligible for PPP loans as long as they are able to certify in good faith that they are an internet-only news publisher or internet-only periodical publisher engaged in the collection and distribution of local, regional and national news. When applying for funds, these organizations will need to include a good-faith certification that proceeds from a PPP loan will be used to cover expenses related to locally focused or emergency information.

The ARPA did not change the current PPP expiration date of March 31, 2021. However, there is bipartisan support in Congress to extend the deadline to May 31, 2021 and provide an additional 30 days for the Small Business Administration (SBA) to process loans submitted by May 31.

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