What the American Rescue Plan Means for Nonprofits

March 15, 2021 | Article

The recently passed American Rescue Plan (ARP) provides much needed relief to Americans still struggling under the impacts of COVID. In addition to the general provisions, the plan has a number of provisions that apply specifically to nonprofit organizations, with some deadlines for action rapidly approaching. 

We recently broke down what is included in the $1.9 Trillion relief legislation package.

Paycheck Protection Program Expansion
The American Rescue Plan has expanded Paycheck Protection Program (PPP) loan eligibility to include any “additional covered nonprofit entity”. Additional covered entities include any organization described in Section 501(c) of the Internal Revenue Code, except for section (3), (4), (6) or (19). The expansion applies only to nonprofit organizations with fewer than 300 employees that do not receive more than 15% of gross receipts from lobbying activities, engage more than 15% of activities in lobbying or incur more than one million in lobbying expenses.

In addition, certain SBA provisions apply to limit eligible entities, notably one that excludes private clubs and businesses that limit the number of memberships for reasons other than capacity. As such, it is possible many private social clubs exempt under 501(c)(7) will not be eligible for loans even under the expansion.

The American Rescue Plan also expanded the eligibility for larger 501(c)(3) and 501(c)(19) organizations that operate in multiple locations. This allows such organizations to apply for first-round PPP loans if they have no more than 500 employees per physical location or to apply for second-round PPP loans if they have no more than 300 employees per physical location.

The deadline for applying for the PPP loans was not extended, so organizations have until March 31, 2021, to apply for loans.

Shuttered Venue Operators Grants
The American Rescue Plan also adds an additional $1.25 billion to the Shuttered Venue Operators Grant (SVOG) program as well as removes the limitation on an organization applying for both an SVOG and a PPP loan. However, an organization that receives a PPP loan on or after December 27, 2020, will need to reduce the amount of SVOG by the amount of PPP loan received (regardless of the amount forgiven.) Entities that receive an SVOG grant will not be eligible to apply for a PPP loan after the SVOG grant has been received.

The SBA anticipates it will start accepting applications for the SVOG program in early April. Organizations that intend to apply for the SVOG grant are encouraged to review the SVOG Eligibility Requirements at SBA and register for a Dunn and Bradstreet number in order to register in the System for Award Management. They should also gather documents that demonstrate the number of employees and monthly revenues to calculate the average number of qualifying employees over the prior 12 months. Lastly, they should determine the extent of gross earned revenue loss experienced between 2019 and 2020. Organizations can review the SVOG Preliminary Application Checklist (this is a preliminary list and not all-inclusive) to see what information will be needed to apply for an SVOG.

Relief for Reimbursing Employers
The provision to provide federal support to cover a portion of the costs of unemployment benefits for employees of state and local governments, federal instrumentalities and nonprofit organizations (reimbursing employers) is extended through September 6, 2021. The amount of Federal reimbursement is 50% through March 31 and 75% from April 1 through September 6, 2021.

Nonprofits have been greatly impacted by COVID-19 and its aftermath. The new relief legislation aims to help nonprofits and others. Make sense of what the provisions mean for you.

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