On December 27, the White House announced that the President had signed H.R. 133, which includes COVID-19 relief and recovery as well as fiscal year 2021 appropriations. ASTC will keep this page up-to-date and will try to ensure that all information is current and correct. We also call your attention to two blog posts from late December: “Congress poised to extend Paycheck Protection Program and allow second draw” (December 21); and “New COVID relief grants program for shuttered venues includes museums” (December 22).
This page was last updated February 18, 2021.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act established several relief programs available to 501(c)(3) nonprofit organizations. These include the Paycheck Protection Program (PPP) 7(a) loan program and the Economic Injury Disaster Loan (EIDL) Program, administered by the U.S. Small Business Administration, and the Federal Reserve’s now-terminated Main Street Lending Program.
Many of these programs were tweaked in the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act (passed at the end of 2020 as part of the omnibus spending bill and COVID relief provisions), which extended and expanded the PPP and established a new grants program for Shuttered Venue Operators—including museums.
Follow the links below to jump to the section of interest:
- Paycheck Protection Program (PPP)
- Shuttered Venue Operators (SVO) Grants
- Economic Injury Disaster Loan (EIDL)
- Main Street Lending Program – no longer active
- Additional Resources
To learn about all the COVID-19 relief programs for nonprofits, see this tool from the Independent Sector or this information about finding financial relief and support from the American Alliance of Museums.
Paycheck Protection Program (PPP)
The Paycheck Protection Program (PPP) provides forgivable loans designed to help small businesses—including nonprofits—keep their staff employed during the COVID-19 crisis. During its first round of funding, the PPP program made more than 5.2 million loans totaling $525 billion (including more than $225 million to ASTC-member organizations).
Borrowers may receive a loan of up to 2.5 times average monthly payroll costs in the prior year (3.5 times for those in accommodations and food service). PPP loans may be completely forgiven if more than 60 percent of the loan is used for payroll costs, essentially turning the loan into a grant. The covered period is at the choice of the borrower, between eight and 24 weeks.
The PPP began accepting new applications through approved lenders for both First Draw loans (for those who did not previously receive a PPP loan) and Second Draw loans (for those who have or will use their first loan in its entirety) during the week of January 11, 2021. Specifically, lenders with $1 billion or less in assets will be able to begin processing applications on January 15, and all lenders on January 19.
The program is available to small businesses—including 501(c)(3) nonprofits that meet the following criteria:
- Employ up to 500 total employees (for First Draw loans) or up to 300 total employees (for Second Draw loans), including both full- and part-time employees (this is down from 500 employees in the previous round of PPP)
- Demonstrate at least a 25 percent reduction in gross receipts in at least one quarter of 2020 relative to the same quarter in 2019, as a way to show significant financial harm from the pandemic.
PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs.
First Draw Loans – Entities that did not receive a PPP loan previously may request up to $10 million.
Second Draw Loans – Borrowers who have or will use the full amount of their first PPP loans may apply to receive a second infusion of up to $2 million.
In addition to payroll, rent, and utilities—that were covered during the first round of PPP loans—the current program expands the list of expenses that may be forgiven to also include the following categories
- “covered operations expenditures,” such as payments for software or cloud computing that facilitate business operations or service delivery
- “covered property damage costs,” for property damage and vandalism or looting due to public disturbances during 2020 that was not covered by insurance
- “covered supplier costs,” for goods essential to operation that were made before the covered period or for perishable goods before or during the loan period
- “covered worker protection expenditures,” for capital or operating expenses to comply with COVID-19 safety and health requirements or guidance issued by Federal, state, or local government—from March 1, 2020 until the end of the national emergency—such as ventilation or filtration systems, sneeze guards, additional business space, health screening capabilities, and personal protective equipment.
The program has also been expanded to also include 501(c)(6) and destination marketing organizations that had previously been excluded. Those receiving—or even applying for—the Shuttered Venue Operators Grant program (described below) are not also eligible for PPP loans.
Community financial institutions were able to make First Draw PPP Loans on Monday, January 11 and Second Draw PPP Loans on Wednesday, January 13. Congress provided up to $284 billion to make loans through March 31, 2021. Of this, $25 billion has been set aside for entities with no more than 10 employees.
Once a lender has offered a PPP loan, it must be disbursed within 10 calendar days of the date of loan approval.
A Closer Look at Eligibility
Does my institution qualify as “small”? The PPP is available to organizations with 500 or fewer total employees (for First Draw loans) or 300 or fewer total employees (for Second Draw loans), adding both full- and part-time, not FTEs. Organizations with more than 300 employees are encouraged to consider the Grants for Shuttered Venue Operators program, which is open to entities with more than 300 or 500 employees.
Do I have to retain employees and salaries? Yes. Our understanding is that, to be eligible for loans forgiveness, employers must maintain the number of employees and compensation levels (up to $100,000) during the loan period.
- Calculating total employees: Guidance from SBA suggests that this should be calculated as the average number of people employed for each pay period over the business’s latest 12 calendar months. Any person on the payroll must be included as one employee regardless of hours worked or temporary status. However, this does not include independent contractors (who are eligible to apply for PPP independently).
What if my institution or organization has closed? Entities that have permanently closed or who have declared bankruptcy are ineligible, but those who are only temporarily closed or temporarily suspended its business remain eligible.
How much can I request? Employers may request a loan of up to 2.5 times of your average monthly payroll costs , up to a maximum of $10 million ($2 million for Second Draw loans). The loan proceeds will provide support for payroll and benefits (including paid leave, insurance premiums, retirement contributions, and state and local taxes) and most mortgage, rent, and utility payments over the 8- to 24-week period of the loan.
Am I likely to get the loan? The CARES Act relaxed requirements for determining repayment ability and creditworthiness, including suspending collateral or personal guarantees, and experiences have shown that most applications were approved. Applicants will be asked to make a “good-faith” certification that current economic uncertainty makes a loan request necessary to support their ongoing operations. Although the PPP is available through March 31, 2021, institutions are encouraged to apply as quickly as possible because there is a funding cap, and lenders will need time to process applications.
- SBA, in consultation with the Department of the Treasury, has established a safe harbor provision for any loans less than $2 million that borrowers “will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” Loans over $2 million are subject to review by SBA on the necessity of the loan request, including both economic harm due to COVID-19 and the lack of access to adequate sources of liquidity.
How much will be forgiven? Loans for which at least 60 percent are used to cover payroll costs and otherwise adhere to the requirements can have 100% of their loan forgiven, essentially turning the loan into a grant. Failure to spend this amount on payroll may result in no forgiveness at all. Note that any compensation to employees above $100,000 is not eligible for loan forgiveness.
How do I apply for forgiveness? You must apply for loan forgiveness from your lender within 10 months of the end of the covered period. Loans of less than $150,000 will have a streamlined application for forgiveness of not more than one page.
How long do I have to repay the loan? The PPP Flexibility Act (PPPFA) extended the loan term to five years, though businesses with loans originating before PPPFA can keep their original term of two years. All borrowers can wait to begin repayment on the date that their lender responds to their application for forgiveness.
What if not all of my loan is forgiven? PPP loans have an interest rate of 1 percent and have a maturity date of five years (for loans issued after June 5, 2020).
How do I apply? You will be apply through an SBA-approved lender, not directly to the agency. Consult the SBA Lender Match to find a lender. You may download a copy of the First Draw or Second Draw application to preview the information that will be required.
What is the deadline for applying? As of now, SBA will be accepting First and Second Draw PPP loan applications through March 31, 2021, through approved lenders. Keep in mind, however, that if the current Congressional appropriation is expended prior to that date, loan applications will close.
Shuttered Venue Operators Grants (SVO Grants)
As described in this blog post, the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act (passed at the end of 2020 as part of the omnibus spending bill and COVID relief provisions) established a new grant program for Shuttered Venue Operators—which explicitly includes museums.
This new grant program will provide a total of $15 billion in support for “a live venue operator or promoter, theatrical producer, or live performing arts organization operator, a relevant museum operator, a motion picture theatre operator or a talent representative” who was fully operational on February 29, 2020 and who intends to reopen—and who can demonstrate a reduction in revenues of at least 25 percent as compared with the previous year, calculated on a quarterly basis.
These grants can be used for rent, utilities, mortgage obligations, state and local taxes, payments to contractors, regular maintenance, administrative costs, taxes, operating leases as well as the procurement of personal protective equipment (PPE) and capital expenditures related to meeting state, local, or federal public health guidelines. SBA says that grantees may use SVO Grant funds for allowable expenses going back as far as March 1, 2020.
Grants may be up to 45 percent of gross revenue in 2019, up to a maximum of $10 million. Grants are expected to provide approximately six months of operating assistance for small and independent live venue operators and their industry partners.
The legislation defines museums as needing to have the following characteristics in addition to the being included in Section 273 of the Museum and Library Services Act (20 U.S.C. 9172), which explicitly includes science and technology centers:
- Serving as a relevant museum as its principal business activity.
- Indoor exhibition spaces that are a component of the principal business activity and which have been subjected to pandemic-related occupancy restrictions.
- At least 1 auditorium, theater, or performance or lecture hall with fixed audience seating and regular programming.
Despite efforts from ASTC and our partners, SBA has determined that the legislation requires them to take a fairly narrow reading of “fixed audience seating.” An FAQ released on January 28, says that “Fixed seating is seating permanently fixed to the floor or ground, per the Economic Aid Act.” ASTC will continue to work with our partners to encourage a more expansive view, which is likely to require Congressional action.
Entities must not have received more than 10 percent of gross revenue from Federal funding during 2019, excluding disaster assistance; please note that Federal grants are included in this calculation. There is no similar limit on funding from state or local governments.
Unlike the Paycheck Protection Program, museums with more than 500 employees and venues associated with universities or with state or other governments are eligible for SVO Grants, as long as they do not own or operate venues in more than one country or in more than 10 states.
Originally a part of the stand-alone Save Our Stages Act (SOS Act) introduced by Sen. John Cornyn (R-TX) and Sen. Amy Klobuchar (D-MN) in July, this legislation was expanded from the original focus on concert and theatrical venues to also include other entities including museums, zoos, and movie theatres.
The legislation sets out a tiered priority system for the initial round of grants. Although you may apply at any time, SBA will process the applications in this priority order:
- During the first 14 days of grants, the program is only available to entities that have experienced at least a 90 percent reduction in revenue between April 1 and December 31, 2020, as compared to the same period of 2019 due to the COVID-19 pandemic.
- During the next 14 days of grants, the program will award grants to those entities that have experienced at least a 70 percent reduction in revenue.
- After 28 days, the program will be available to all eligible entities, as described above. At least 20 percent of the total appropriated funds ($3 billion) will be held back to ensure that not all funds are expended for the hardest-hit entities.
The program sets aside $2 billion for venues that employ no more than 50 staff members during the first 60 days of implementation. The initial information that all grants within the first 60 days would be made to small venues is no longer applicable.
The Small Business Administration (SBA) may provide supplemental grants up to 50 percent of the initial grant, as long as the total is less than $10 million per entity.
Congress requires the SBA to develop an oversight and audit plan, so we can expect increased scrutiny of grants under this program.
SBA released a list of Frequently Asked Questions (FAQs) that provides additional details.
In addition, SBA hosted an introductory webinar about the Shuttered Venue Operators Grants on Thursday, January 14, 2021. A recording is available on SBA’s YouTube channel: https://youtu.be/PdfQGb6z-gg
When will the program details be available? We don’t know the exact timeline, but SBA is moving forward with developing the detailed rules for the program, which will be made available at www.sba.gov/svogrant. Acting on behalf of ASTC and the other museum associations, the American Alliance of Museums is working with the SBA and communicating the concerns and questions of the museum field, as they roll out this grant program.
What can I do to prepare? The SBA encourages potential applicants, including museums, take some preparatory actions to be positioned to move quickly when the process opens although no timeline has been indicated. These include registration in the System for Award Management (SAM) at www.sam.gov. You can find instructions for grantees here or view a 15-minute training video focusing on entities registering solely for Federal financial assistance. The SBA also is recommending potential applicants to start organizing their financial statements, tax documents, and other governing documents (e.g., articles of incorporation) to be responsive to any data required to support the application. You will also need documents demonstrating the number of employees, monthly revenue, the extent of gross earned revenue loss experienced between 2019 and 2020, and copies of floor plans, contracts, and other evidence that will be needed to apply for SVO Grants.
How do I decide whether to pursue SVO Grants or PPP? That is a decision that you will have to make based upon your eligibility and need. Many museums may find that the SVO Grant program has the potential to provide more support for a wider range of expenses and over a longer period of time, however SVOG also has additional eligibility requirements. In addition, the funds allocated for SVOG are likely to be expended more quickly so especially if you do not fall into one of the early priority groups, you should consider the likelihood of funds being available when your application is considered.
Can I apply for both a SVO Grants and a PPP loan? Generally no. According to the FAQ, “per the Economic Aid Act, as well as how the PPP loan system operates, entities cannot apply for a PPP loan and SVOG at the same time. Entities must make an informed business decision as to which program will most benefit them and apply accordingly. If an applicant is rejected by one program, it will then be eligible to apply for the other.”
What if I already received a PPP loan? Entities receiving a PPP loan prior to December 27, 2020, may apply for SVOG, but entities may not receive both a second round PPP loan (First or Second Draw) and a grant for shuttered venue operators. We understand that even applying for PPP will disqualify an applicant for SVO Grants.
What if I received or am applying for EIDL? Applying for or receiving an Economic Injury Disaster Loan has no bearing on the Shuttered Venue Operators Grant program.
Is there a size limit for eligible institutions? Unlike the PPP (which limits applicants to those who have at most 300 employees), the SVO Grant program does not have a single upper limit. However, entities are not eligible if more than two of these conditions are true:
- Owning or operating museums in more than one country.
- Owning or operating museums in more than 10 states.
- Employing more than 500 employees as of February 29, 2020.
If my museum is associated with a state or local government, am I eligible? In general yes, as long as you meet other eligibility requirements.
If my museum is a hybrid nonprofit/government al entity, am I eligible? In general yes, as long as you meet other eligibility requirements. SBA encourages such institutions to apply under the nonprofit’s name and provide documentation of the public/private partnership in its application.
If my museum is associated with a college or university, am I eligible? In general yes, as long as you meet other eligibility requirements.
- If your museum does not have a separate legal existence from its parent institution or if it is majority owned or controlled by the university, you will have to use the gross revenue of the parent university to calculate whether more than 10% of the gross revenue comes from Federal source (excluding any disaster assistance).
- If your museum has a separate legal existence that is not majority controlled by the university, you need only consider your own 2019 gross revenue.
What does “fixed audience seating” mean? What if I don’t have an auditorium or theatre with fixed seating? SBA released an FAQ that says that “Fixed seating is seating permanently fixed to the floor or ground, or which is so heavy or cumbersome as to make removing it impractical, per the Economic Aid Act.” Elsewhere in the FAQ, “the Economic Aid Act specifically requires fixed seating and makes no allowance for temporary, removable, modular, convertible, or other non-fixed seating arrangements.” We understand this interpretation is challenging for many institutions that have flexible spaces for their live events. ASTC will continue to work with our partners to encourage a more expansive view, including potential Congressional action.
How many seats need to be fixed? According to the FAQ from SBA, “a majority of the seating provided in that space must meet the definition of fixed seating.”
What if the only fixed seating I have is at an outdoor amphitheater? The FAQ from SBA does confirm that venues that have outdoor spaces with fixed seating do count, as the legislation does not require these spaces to be indoors. Even if you are not able to use this space year-round, the space would qualify as long as you have an average of at four events monthly.
What does “regular programming” mean? According to the FAQ from SBA, the define regular programming “to mean programming provided on an ongoing and near-continuous basis of an average of at least four times a month over the course of a year in its qualifying theater, lecture hall, or similar venue.” You may aggregate programming across all qualifying performance spaces rather than calculating each individually.
What is the definition of “earned revenue”? According to the FAQ from SBA, “earned revenue” is defined only as “monies organizations receive from the sale of goods or services.” This generally does not include other sources of funds such as donations, sponsorships, foundation grants, governmental assistance, or returns on investments.
What if my organization is new? The SVOG program is available to any eligible entity that was in operation as of February 29, 2020. For entities that were in operation on January 1, 2019, applicants may apple for the lesser of an amount equal to 45% of their 2019 gross earned revenue OR $10 million. For entities who began operation after January 1, 2019, the lesser of the average monthly gross revenue for each full month you were in operation during 2019 multiplied by 6 OR $10 million.
How should I determine how many employees I have? SBA sets out a tiered system for calculating the number of employees (detailed below): Once the qualifying employees are determined, an entity must then calculate the average number of employees it had over the prior year by adding up the number of qualifying employees in each individual pay period and dividing that amount by the number of pay periods over the 12-month period from March 1, 2019 to February 29, 2020.
- Employees that work at least 30 hours per week are considered full-time.
- Employees that work 10–29 hours per week are considered to be half-time.
- Employees that work less than 10 hours per week should not be considered employees for this purpose.
Economic Injury Disaster Loan (EIDL)
Economic Injury Disaster Loans (EIDLs) provide small businesses with working capital loans of up to $2 million to help overcome the temporary loss of revenue that they are experiencing due to the COVID-19 pandemic. Unlike other SBA programs described above, EIDLs are loans that must be paid back.
Loan proceeds may be used to meet financial obligations and operating expenses—including working capital and normal expenses—that could have been met had the pandemic not occurred.
These loans, which have a term of 30 years, have a 2.75% interest rate for nonprofits (3.75% for for-profit companies). There are no pre-payment penalties or fees. Payments are deferred for one year, although interest will still accrue. Collateral is required for loans over $25,000. A $10,000 EIDL Advance that had been part of the program in 2020 is no longer available as all Advance funds have already been allocated.
On June 15, the SBA re-opened its EIDL program after temporarily limiting applications to only agricultural business due to a high volume of applications and dwindling funds. A number of science and technology centers and museums have applied for and received EIDLs previously.
Main Street Lending Program – no longer active
The Main Street Lending Program, which is run by the Federal Reserve Board and administered by the Federal Reserve Bank of Boston, offered three types of loans to medium-sized businesses who have 15,000 employees or less. The program ended on January 8, 2021. These loans ranged in size from $250,000 to $50 million and are not forgivable.
In mid-June, the Federal Reserve drafted a proposal to expand the program to nonprofit loans, requesting public feedback. ASTC, in partnership with other museum associations, submitted feedback. The final loan facilities have yet to be released.
All loans in the program had a term of five years, and principal and interest payments on the loans can be deferred for two years. Businesses must be of sound financial condition prior to the COVID-19 pandemic to be eligible. Read the FAQs (last updated after the Federal Reserve announced a program expansion on a June 8).
To apply for a Main Street Lending Program loan, borrowers needed to work with a registered lender, including banks, savings associations, and credit unions. Loans could be made through September 30, 2020.
In order to lessen the credit risk to lenders and free up more of their capital, the Main Street Lending Program intends to purchase 95% of each eligible loan that is submitted to the program and plans to spend up to $600 billion to this end.
Several organizations have created guides comparing the CARES Act loan programs:
- U.S. Chamber of Congress: Coronavirus Emergency Loans: Small Business Guide and Checklist
- Small Business Administration: Coronavirus (COVID-19): Small Business Guidance & Loan Resources
- Congressional Committees:
- National Council of Nonprofits: A chart comparing eligibility criteria, terms, and application information
- Kresge Foundation: Nonprofit Guide to Accessing Capital Through the 2020 CARES Act