Congress Expands Eligibility for Non-Profits to Qualify for PPP Funding, But Time is Running Out

On Wednesday evening, the House of Representatives voted to pass the American Rescue Plan Act of 2021 (ARPA) which had been amended by the Senate a few days before. Yesterday afternoon (Thursday), President Biden signed the Act into Law. The ARPA carries with it a slew of provisions, appropriations, and changes to previous legislation aimed to provide relief and funding for individuals and businesses impacted by the COVID-19 pandemic. BNN published an overview of some of ARPA’s contents on Wednesday.

What might be of particular interest to some are the modifications made to expand the eligibility criteria for certain nonprofits to qualify for funding under the Paycheck Protection Program (PPP). Previous information on the PPP can be found on our website’s Covid-19 Resource Center.

Under Title V of the ARPA, nonprofits that are tax-exempt under 501(a) and described in Internal Revenue Code sections other than 501(c)(3), (4), (6), or (19) also may now qualify for a PPP loan. Such organizations that employ more than 300 employees are still ineligible, however. Additional stipulations are that such organizations cannot conduct more than 15 percent of their activities as lobbying activities, receive more than 15 percent of their gross receipts from lobbying endeavors, or spend more than $1,000,000 on lobbying expenditures in its most recent tax period that ended prior to February 15, 2020.

Additionally, larger tax-exempt organizations that previously were described in Code sections listed in the preceding paragraph but were until now unable to qualify because they employed more than 500 persons may be able to qualify now. There may be some flexibility for organizations with more than 500 employees to qualify as well so long as they do not employ more than 500 employees at any physical location. The ARPA does not appear to clearly define what constitutes a separate physical location at this time.

Unfortunately, time is of the essence. At the time of this article’s publication PPP applications need to be submitted no later than March 31, 2021, which is less than three weeks away. Some banking institutions have also indicated that they have set their own deadlines for applications that precede the March 31 federal deadline. There is some hope and speculation that given the timing of the enactment of the ARPA that Congress could extend the March 31 deadline and recently introduced legislation is attempting to push the deadline to May 31. However, it would likely still behoove clients who may become eligible based on the new criteria to move swiftly to apply in case the deadline remains unchanged.

For more information, please contact your BNN tax service provider at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.