PPP vs. SVOG updates (3/15/21)
The American Rescue Plan Act (P.L. 117-12, Also see March 12 Alliance Advocacy Alert Congress Passes $1.9 Trillion COVID-19 Relief Legislation), eliminates the restriction that applicants to an SVOG cannot also apply for a PPP after December 27, 2020. The new law allows SVOG awardees to simply reduce the amount of an SVOG award by the amount of the 2021 PPP loan to avoid eligible entities from double-dipping. The latest SBA FAQ states “While entities originally were prohibited from receiving both forms of SBA assistance, the American Rescue Plan Act, which became law on March 11, 2021, removed this restriction. . .Any entity that receives a PPP loan on or after Dec. 27, 2020 (whether First Draw or Second Draw), will have the PPP loan amount deducted from the SVOG amount.”
Remember, the last day to apply for a PPP is March 31, 2021. This process will then clear the way for you to also apply for SVOG when that application portal opens as expected in a few weeks. Nonprofit organizations, including AAM, business groups, and accounting professionals continue to press for extending the sunset for several more months to give employers more time to apply.
The SBA has stated that the application portal may not open up until after March 31. In the meantime, the SBA continues to update their Frequently Asked Questions (FAQs). Check this FAQ often for future updates.
- SBA has updated the SVOG chart of grants on their website to correctly reflect that Third Priority Grant losses of 25% will be based on “earned revenue.”
- For the First and Second Priority Grants, SBA has confirmed that eligibility will be based on minimum losses of 90% and 70% of gross revenue, respectively. However, there is still a possibility that certain revenue items, such as capital gains, could be exempted from the definition of “gross revenue.”
- For the $2 billion Small Business Set-Aside Grants (eligible entities with no more than 50 full-time employees), the legislation indicates that these grants are available to any eligible entity who has a minimum loss of at least 25% gross earned revenue between one quarter of 2019 and the corresponding quarter of 2020. However, the SVOG website does not reflect that. It merely says “revenue.”
- Regarding the SVOG rule that no more than 10% of an eligible entity’s gross revenue can come from federal resources, SBA has made updates that neither state/local governments nor public universities will be subject to this provision now.
- SBA confirmed that mobile touring facilities, such as traveling tent shows and festivals can qualify as a shuttered venue.
- Definition of an eligible “Performing Arts Organization Operator” has been defined as “any entity (including a theatrical management business) which meets the criteria established under the Economic Aid Act and whose principal business activity is to create, produce, perform, and/or present live performances for audiences in qualifying venues, including amphitheaters, concert halls, auditoriums, theatres, clubs, festivals, and schools.”
SBA Newly Released Training Videos and Resources
- Eligibility for Museum Operators (3/5/21)
- SVOG video for Live Venue Operators
- How to Register for DUNS and SAM
- Updates to the Shuttered Venue Operators Grants Frequently Asked Questions
- Eligibility requirements for various entities
- Preliminary application checklist (3/11/21) to help you begin the process of pulling together supporting documentation expected to part of the application process.
Watch a free webinar recorded on February 2 by AAM in partnership with Raffa – Marcum’s Nonprofit & Social Sector Group, to learn from Marcum’s nonprofit experts about updates to COVID-19 relief legislation, PPP second draw, Shuttered Venue Operators Grants, eligibility, forgiveness, which opportunities to pursue, and more. Recording and slides available here. (Note that if you did not register for the event you will need to complete a form to view the recording and slides). With such great interest in this topic, Marcum created a Q&A document to help address the webinar attendees’ inquiries and answered with information available at present.
The American Rescue Plan Act (ARPA) provides an additional $1.25 billion in SVO funding to the current $15 billion, which includes eligible museums.
Paycheck Protection Program (PPP) Forgivable Loans
If you’re still considering applying for either a First or Second Draw Paycheck Protection Program Loan, there are still funds available, but you must act soon. The SBA reports that it has approved 2.4 million new PPP First and Second draw loans, totaling $164.9 billion. There is $120 billion in PPP funds still available through the March 31, 2021 deadline. SBA Associate Administrator Patrick Kelly stated today that he has confidence there will be enough funds through the end of the month to accommodate PPP loan requests from eligible businesses.
You do not need to submit your Forgiveness Application for last year’s PPP before you apply for a Second Draw this year. However, you do need to certify that you used the funds properly and that you incurred a reduction in gross receipts of at least 25% in any one quarter’s comparison between 2019 and 2020.
- Form 2483- First Draw Borrower Application and Top-line Overview
- Form 2483-SD – Second Draw Borrower Application and Top-line Overview
In order to provide enhanced equity in reaching the smallest businesses, the Biden Administration created a two-week window to only process PPP loan applications for businesses
The Biden Administration also announced four additional changes to prioritize the Paycheck Protection Program (PPP) to support as many underserved small businesses and self-employed workers as possible, effective 3/3/21. SBA released two new forms:
- First Draw Borrower Using Schedule C – effective 3-3-21
- Second Draw Borrower Using Schedule C – effective 3-3-21
Legislation: ARPA provided an additional $7.25 billion in PPP funding to current funding.
Shuttered Venue Operators (SVO) Grants
SBA Issues Shuttered Venues FAQ: The U.S. Small Business Administration continues to regularly update its FAQ about the Shuttered Venue Operators Grant (SVOG) program, Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) signed into law on Dec. 27, 2020, which includes answers to frequently asked questions about the program relevant for museums. The SBA noted that the FAQ will be updated as new information comes available and additional program details are finalized. The FAQ includes information about eligibility, definitions, forthcoming application, use of funds, business size/employees, revenue and other issues. SBA has still not opened up the new SVO grants portal. The demand is very high for this program with only $15 billion available ($16.5 billion available after the expected passage of the American Rescue Plan Act). Here are some things you can do to get ready to apply as soon as possible, regardless of which Priority Category that you may fit into:
- If you or your organization does not already have a Dunn and Bradstreet DUNS Number, get one.
- Use your DUNS number to register in the federal government’s System for Award Management (SAM). You can’t simply use a Taxpayer or Employer ID Number to apply for an SVO grant. (Note: It could take up to two weeks to finalize a SAM registration.) See How to Register for DUNS and SAM.
- Gather documents that demonstrate your number of employees and monthly revenues so you can calculate the average number of qualifying employees you had over the prior 12 months.
- Determine your gross and earned revenue losses
- Determine the extent of gross and earned revenue loss you experienced between 2019 and 2020 on a quarterly basis.
- Make PDFs of additional information such as floor plans, contract copies and other evidence that will be needed to apply for an SVO grant. See Preliminary application checklist to help you begin the process of pulling together supporting documentation expected to part of the application process.
- Sign up for a regional mailing list and webinar in your area and develop a direct relationship.
- Ask the SBA specific questions about SVO eligibility by e-mailing SVOGrant@sba.gov.
SVOG Resources to Review:
- SBA’s Frequently Asked Questions on SVO Grants
- Proskauer law firm’s excellent analysis of the Shuttered Venue Operators Grants
Targeted EIDL Advances
Advance funds of up to $10,000 will be available to only applicants located in low-income communities who previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding. Eligible applicants do not need to take any action at this time. Applicants will be contacted directly by SBA via email and they will first reach out to EIDL applications that already received a partial EIDL Advance (between $1,000 – $9,000). Applicants will need to prove at least a 30% loss in gross receipts during any 8-week period comparing 2019 and 2020.
Legislation: ARPA provides an additional $15 billion in Targeted EIDL Advance funding to current funding.
Institute of Museum and Library Services (IMLS) COVID Relief
ARPA appropriates an additional $200 million for IMLS to support states’ efforts to expand digital network access, purchase internet accessible devices, and provide technical support services to address digital inclusion efforts and related technical support in response to the pandemic.
National Endowment for the Arts (NEA) COVID Relief
ARPA appropriates an additional $135 million each to the NEA and NEH in supplemental COVID-19 economic relief grants in current 2021 legislation.
Pandemic Unemployment Assistance
ARPA extended temporary federal unemployment benefits from March 15, 2021 to September 6, 2021 with a weekly federal supplemental benefit of $300. The first $10,200 will be non-taxable in 2021 for households with an adjusted gross income under $150,000.
Direct Economic Stimulus Checks
ARPA provides an additional $1,400 per taxpayer, phasing out for taxpayers with more than $80,000 of the last filed adjusted gross income for singles, $120,000 for heads of household, and $160,000 for married couples. It also significantly expands the Child Tax Credit to $3,000 per child ($3,600 for children under 6), which can be fully refundable and advanceable.
Federal Tax Income Questions & Answers
- PPP funds should not be included in your taxable income.
- PPP covered expenses can still be deducted on your tax return.
- IRS direct stimulus checks should not be included in your taxable income.
- EIDL Advances should not be included in your taxable income.
- EIDL Loans are debt that must be repaid. They should not be included in your taxable income.
- CARES Economic Relief Funds that State and Local Governments re-granted to individuals and businesses should be included in your taxable income according to the IRS.
- State and Federal Pandemic Unemployment Assistance should be included in your taxable income.
- Employee Retention Credits cannot be taken on that portion of employee wages that were covered with a PPP forgivable loan.
- It’s not confirmed yet, but similar to PPP, it appears SVO grants will not be included in your taxable income, but your covered expenses can still be deducted.
See AAM’s Finding financial relief and support (for individuals and institutions) for additional detailed information and resources.
Thanks to Marcum and Americans for the Arts for providing much of this critical information.