ASTC is reading through the text of the almost 5,600-page omnibus spending and COVID relief bill for provisions relevant to the ASTC community. This is the first in a series of blog posts about the legislation in which we highlight changes to the Paycheck Protection Program. Please also see another post discussing the new Grants for Shuttered Venue Operators program; additional posts on other aspects of this massive legislation will follow.
If the United States Congress passes the combined COVID relief and omnibus spending bill this week as expected, most members of the ASTC community will have the opportunity to seek additional Federal government relief and recovery support.
ASTC has been reading through the text of the almost 5,600-page omnibus spending and COVID relief bill for provisions relevant to the ASTC community (bill text).
Paycheck Protection Program
The bill contains a number of changes to the Paycheck Protection Program (PPP) offered by the U.S. Small Business Administration (SBA), which provided more than $100 million in forgivable loans to ASTC members earlier in the year. Among the highlights of the new legislation is the opportunity for organizations which received earlier PPP support to apply for a second draw of funds.
As before, the PPP provides emergency support for small business to help retain their workforce and to have much or all of that loan be forgiven, essentially turning the loan into a grant.
PPP is available to nonprofit organizations in addition to for-profit small business, as long as borrowers do not employ more than 300 employees (down from 500 employees in the previous round of PPP funding). In addition, borrowers must 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.
ASTC notes that some of our largest members will still be ineligible for PPP loans as well as science and technology centers and museums that are affiliated with universities or government entities. We will continue to make the case for these institutions, although some may have the opportunity to seek support under new Grants for Shuttered Venue Operators (see this blog post for more information).
The current bill expands the list of expenses that may be forgiven from the initial focus on payroll, rent, and utilities 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.
We expect that Congress will appropriate nearly $285 billion for the program, including a set-aside of $35 billion for first-time PPP borrowers, with $15 billion of that limited to first-time borrowers with 10 or fewer employees or for loans less than $250,000 in low-income areas.
Eligibility now includes 501(c)(6) and destination marketing organizations that had previously been excluded. Please note that those receiving Grants for Shuttered Venue Operators are not also eligible for PPP loans. The SBA is also asked to create a simplified application for forgiving loans of up to $150,000, which would not be more than one page in length.
Second draw PPP loans
One of ASTC’s top priorities has been included in this bill: the ability for small businesses—including nonprofits—to have a second opportunity to receive PPP funds.
These “second draw” loans allow borrowers who have or will use the full amount of their first PPP loans to receive a second infusion of up to $2 million. As with new loans, borrowers must not employ more than 300 employees and have demonstrated at least 25 percent reduction in gross receipts relative to the same quarter of 2019. In addition, full forgiveness will require that at least 60 percent of the loan is used for payroll costs.
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).
There is $25 billion set-aside in the second draw PPP loans for smaller borrowers with 10 or fewer employees or loans less than $250,000 in low-income areas to receive second draw PPP loans.
ASTC will continue to monitor the legislation as we learn the full extent of the provisions regarding PPP and other relief and recovery programs. For additional information, the following resources may be helpful:
- H.R. 133 Division-by-Division Summary of COVID-19 Relief Provisions prepared by the Democratic Staff of the House Committee on Appropriations
- Nonprofit Provisions in COVID Relief Legislation from National Council of Nonprofits