As part of the proposed $ 1.9 trillion stimulus package, the paycheck protection program would be expanded to provide loans to more categories of nonprofit entities. PPP loan enthusiasts will recall that PPP loans were originally only available to 501 (c) (3) and 501 (c) (4) civic league charities, and have since become available to organizations. social protection 501 (c) (6) trade leagues, chambers of commerce and real estate boards, as well as 501 (c) (19) veterans organizations. Section 501 (c) (3) of the Code and PPP enthusiasts will be happy to hear that the new law will make PPP loans available to all other non-profit organizations except those described below. below. Any 501 (c) organization exempt from tax under section 501 (a) will be eligible to receive PPP loans.

This new rule will allow non-profit labor, agricultural and horticultural organizations, clubs organized for fun, recreation and other non-profit purposes, beneficiary fraternal societies and other non-profit organizations. profit that are conducted as active businesses and meet the conditions that otherwise apply to PPP borrowers to qualify for PPP loans.

Section 120.110 of Title 13 of the U.S. Code states that the following businesses and charities are not eligible for PPP loans:

• companies located in a foreign country outside the United States,
• life insurance companies,
• companies mainly engaged in political or lobbying activities,
• pyramid sales distribution plans,
• companies deriving more than a third of gross annual revenues from legal gambling activities,
• businesses engaged in illegal activity (including manufacturing or selling marijuana for medical or recreational purposes, which is illegal under federal law), and
• private clubs and businesses that limit the number of memberships for reasons other than capacity will not be eligible.

Due to a lobbying issue, this bill creates a catch-all category called “additional covered non-profit entity” which allows all 501 (c) non-profit entities (other than (c) (3 ), (4), (6) and (19)) to benefit from PPP loans provided that:

1. the organization does not receive more than 15% of its revenue from lobbying activities;
2. the lobbying activities of the organization do not represent more than 15% of the total activities of the organization;
3. the cost of the organization’s lobbying activities did not exceed $ 1,000,000 in the organization’s last tax year that ended before February 15, 2020

To be eligible for this new catch-all category, the organization must not employ more than 300 employees. In addition, this bill provides for extended eligibility for large non-profit entities:

• 501 (c) (3) and veterans organizations that employ 500 or fewer staff per location; and
• 501 (c) (6) Organizations, national marketing organizations and “other covered not-for-profit entities” that employ 300 or fewer employees.

In addition to the IRC Section 501 (c) organizations above, Internet publishing and distribution and web search portal companies classified under the Industry Classification System code of America North of 519130 may now be eligible for PPP loans. These organizations must have (a) 500 or fewer employees in each physical location or (b) meet applicable US SBA size standards to qualify, which will likely be issued by the SBA before the legislation is passed. The organization must certify in good faith that it is engaged in “the collection and distribution of local or regional and national news[.]”

Internet publishing and distribution organizations include businesses that operate Internet search portals, Internet social networking sites, and entities that wholesale or retail Internet products that would otherwise qualify.

The American Rescue Plan Act makes P3 loans more accessible to businesses and nonprofits, but only adds an additional $ 7.25 billion in additional funding to the program (compared to the more than $ 660 billion already disbursed) and does not extend the current PPP application period that is set. until March 31, 2021.

For a more in-depth look at how PPP loans interact with employee retention credit after IRS Notice 2021-20, click HERE.

More information on the EIDL loan program (which has benefited greatly from this new legislation), click on HERE.

On Saturday, March 20 at 11 a.m. EDT, I’ll be hosting a free 30-minute webinar on PPP, ERC, Restaurant Revitalization, and Shuttered Venue rule updates. An invitation can be received by sending an email to info@gassmanpa.com with “Update” in the subject line.