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Changes Made To PPP And EIDL Programs By $1.9T American Rescue Plan

Paycheck Protection Program (PPP) Changes

The newly passed $1.9T American Rescue Plan Act of 2021 included some changes to two very popular SBA programs; the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. While the new bill allocates a relatively small amount of NEW money to the PPP ($7.25 billion in additional funding) when compared to previous bills, it does bring in some new businesses that may not have been eligible previously. The American Rescue Plan Act of 2021 opens the PPP up to 501(c)(3) organizations and veterans organizations that have 500 or fewer employees per location, as well as 501(c)(6) organizations, domestic marketing organizations, and additional covered not-for-profit entities that have 300 or less employees per location. Lastly, internet-only news publishers with more than one location are also now allowed to apply for a PPP loan, as long as they have no more than 500 employees per location. The "additional covered nonprofit entities," as they are referenced in the bill language, are now eligible to apply for a PPP loan if they meet the following criteria:
  • No more than 15% of their receipts come from lobbying activities;
  • Lobbying activities make up less than 15% of their total activities;
  • They did not spend more than $1 million on lobbying activities during their most recent tax year that ended prior to Feb. 15, 2020; and
  • They employ 300 or fewer employees
The American Rescue bill does not extend the PPP's application window, and the deadline to apply for 1st or 2nd draw PPP loans remains March 31. As of last week, there was still over $100B that remained available in the PPP. If you have not yet applied for your 1st and/or 2nd draw loans and feel you are a candidate for the program, please contact your preferred lending institution or search for one on the SBA website to begin the application process.

EIDL Changes

For the EIDL program, The American Rescue Plan Act adds an additional $15 billion to be used for Targeted EIDL Advance grants. These Advance grants were added to the long-standing EIDL program due to the coronavirus pandemic, and served as a forgivable grant of up to $10,000 ($1000 per employee and capped at $10,000 per business) on top of the amount the business was seeking through the EIDL program. The additional $15B in funding for this program is intended to provide funds to businesses, and is broken down into 2 separate pools of funds as follows:
  • $10,000,000,000 to make payments to covered entities that previously applied for an EIDL but did not receive the full amounts to which they were entitled due to lack of available program funding
    • “Advance funds of up to $10,000 will be available to applicants located in low-income communities who previously received an EIDL Advance of less than $10,000, or those who applied but received no funds due to lack of available program funding”
    • Applicants do not need to take any action at this time.
    • SBA will reach out to those who qualify.
  • $5,000,000,000 to make $5,000 payments to a business that:
    • has suffered an economic loss of greater than 50 percent; and
    • employs not more than 10 employees;
These funds will be distributed in multiple steps, according to the SBA. For the $10B pool of funds, they will first reach out to EIDL applicants who already received a partial EIDL Advance (between $1,000 - $9,000). Applicants will be contacted directly by SBA via email with instructions to determine eligibility and submit documentation. For the $5,000 grants that come out of the $5B pool of funds, the SBA will issue $5,000 grants to "severely impacted" small businesses that have experienced a decline in receipts of more than 50% and have 10 or fewer employees. They may then make $5,000 grants available to "substantially impacted" businesses, which also have 10 or fewer employees and have experienced a decline in receipts of between 30% and 50%.