The PPP loan changes, part of the American Rescue Plan Act of 2021 passed by the House on Saturday, would still need to be considered in the Senate version of the legislation and passed by Congress before heading to President Joe Biden for his signature. And parts of the legislation might already be in jeopardy, with Democrats dealing with a setback on a $15-per-hour minimum wage that will likely prevent its inclusion in the Senate version.
The provisions in the House bill include waiving the size cap for nonprofits, which were previously capped at 500 employees, in favor of a cap of 500 employees per physical location. The change was sought by advocacy groups who said nonprofits employ large numbers of part-time employees and have also shouldered a larger burden providing services during the Covid-19 pandemic.
The legislation also opens up the PPP to nonprofits not previously eligible, as long as they do not spend more than 15% of their funds on lobbying efforts or receive more than 15% of their revenue from lobbying activities, among other qualifiers. And it waives affiliation rules, allowing interconnected nonprofits to access the program.
It also means these newly eligible PPP loan recipients could take out a second-draw PPP loan as long as they suffered a 25% revenue loss and employ 300 employees or fewer.
"We are glad that this bill would expand Paycheck Protection Program (PPP) eligibility to some nonprofits with more than 500 employees and repeal the ‘affiliation rule,’" the National Council of Nonprofits said in a press release after the bill's House passage. "Both of those limitations cut off many charitable organizations from economic relief over the past year. Newly eligible nonprofits will need time to apply for these funds, so an extension of the program beyond March 31 is essential."
The legislation also allows for digital-only news organizations to be eligible for the PPP as long as the business has 500 employees or less per physical location. Digital-only news organizations must certify that the loan will support locally focused or emergency information.
Changes to the PPP passed by Congress in December expanded the eligibility of newspaper publishers and television stations specifically, but left out digital-only outlets.
The legislation also waives the prohibition against publicly traded companies in this particular instance, allowing publicly traded internet-only news publishers to apply for PPP loans. Lawmakers had been pushing since the early days of the PPP to include digital-only publications in the program, with some lawmakers signing a letter in May that the structure of digital-only outlets precluded their participation in the program.
The bill also provides an additional $7.25 billion for the PPP, increasing the total program authorization to $813.7 billion.
Across both the first round of the PPP over the summer and the second round that opened in January, the SBA has approved more than 7 million loans for more than $662 billion. The SBA has forgiven about 1.7 million of those so far, with less than 242,000 under review as of Feb. 25, according to SBA data.
The legislation that passed the House also includes tens of billions of dollars in grant programs for small businesses, including an additional $15 billion for the Small Business Administration's Targeted Economic Injury Disaster Loan Advance program, $25 billion for restaurants and $1.5 billion for venues.
Meanwhile the Biden administration's decision in February to tweak the PPP could mean more money for some small businesses and gig workers. And the December legislation that authorized the second round of PPP loans for 2021 also included tax relief, which we have detailed here, as well as simplified PPP loan forgiveness applications for loans of $150,000 or less. The program also now covers personal protective equipment and other Covid-19 expenses, which allows small businesses to receive full forgiveness for any spending related to those measures.