On December 27, 2020, the Consolidated Appropriations Act of 2021 (Act) was signed into law. The Act affects several provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The largest of these relates to the Paycheck Protection Program (PPP) loans.
You may recall that PPP loans became available as a result of CARES and that the initial round of funding, $349 billion, was utilized within two weeks. The second round of funding, $320 billion, ended on August 8, 2020. With the passage of the Act, an additional $284 billion in funding will be available for eligible PPP loans until March 31, 2021, or until funds are exhausted.
The Act has also expanded eligibility for the PPP loan to allow for a second draw of the loan, as organizations are permitted to receive a maximum of $2 million. However, gross receipts for eligible organizations will need to have decreased at least 25% in the first three quarters of 2020 as compared to 2019. Organizations will also need to have 300 employees or less and have expended, or will expend, the PPP loan that had been previously received.
In addition to this second draw of PPP loans, the Act opens the door for certain 501(c)(6) organizations to take part in the program. While CARES did not allow for this, the Act provides that 501(c)(6) organizations are now eligible if they meet the following criteria:
- 15% or less of its receipts are from lobbying
- 15% or less of its activities are from lobbying
- Lobbying activities did not exceed $1 million for the last tax year
- There were no more than 300 employees
The other large impact of the Act comes in the form of funding for the Save Our Stages (SOA) Act. The Small Business Administration is authorized to make grants “to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25% reduction in revenues quarter-over-quarter comparing 2020 to 2019.”
It is important to keep these two separate, however, as those who receive the PPP loan after December 27, 2020 are not eligible for assistance under SOA.
BBD is monitoring developments and is available if you have any questions.