Policy Update: PPP Guidance and Upcoming Legislation

PPP Program Updates

Established in March in the CARES Act, the Paycheck Protection Program (PPP) makes low-interest loans available to charitable nonprofits. The program permits up to 100 percent forgiveness of those loans under certain circumstances. This month, the Small Business Administration (SBA) released the Loan Forgiveness Application and additional information to aid borrowers and lenders alike as they begin the loan forgiveness process.

• Process: The application is to be submitted to your lending institution. After submitting, your lender has 60 days to make a decision regarding loan forgiveness. The lender then sends its determination of full or partial forgiveness (or ineligibility) to SBA, which has 90 days to review and respond.
  • Loan Forgiveness Application
• Key Components: SBA states that the application for loan forgiveness is designed to “reduce compliance burdens and simplify the process for borrowers.” They highlight the following:
  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week (56 day) period after receiving their PPP loan
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
• Public Comments: While the Loan Forgiveness Interim Final Rule is currently in effect, it is still open to public review and comment. If you are interested, public comments are due on approximately June 25, 2020.
  • Make public comments here.
• Resources:
  • Guidance on Loan Forgiveness – Small Business Administration
  • PPP Loan Forgiveness Interim Final Rule Analysis – National Council of Nonprofits

Paycheck Protection Program (PPP) Flexibility Act: On Thursday, May 28 the U.S. House of Representatives passed this bill. As it stands, it would accomplish the following:

• extend the PPP through 12/31/2020
• expand the covered period for loan use from eight weeks to 24 weeks
• expand maturity from 2 years to 5 years for new loans and permit borrower and lender to mutually agree to later maturity
• Forgiveness provisions
  • Ease rehire requirement based on inability to rehire former or similarly qualified employees, or inability to return to operations levels
  • Revise the 75%/25% rule to 60%/40%
• Defer payments of principal, interest, and fees until either the date the lender receives payment for forgiven amount of loan or 10 months after the end of the covered period
• Make PPP participants eligible for employer payroll tax deferral (CARES Act Sec. 2302)

 

Upcoming Legislation

 
Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act: On Friday, May 15 the U.S. House of Representatives passed this bill, but it is not expected to pass the Senate. The bill contains the following:

• Employee Retention refundable credit: Would increase the value of the employee retention credit and modify existing gross receipts requirement
• Delayed Payment of Payroll Taxes: Would allow nonprofits to pay 2020 employer portion payroll taxes in equal halves at the end of 2021 and 2022
• Unemployment Insurance: Would extend the relief provided in the CARES Act through January 31, 2020
• Paycheck Protection Program Revisions
  • Expands PPP to nonprofits of all sizes
  • Dedicates 25% of all PPP funding for nonprofits
  • Loan Forgiveness Changes
• Loan Program for Midsize Nonprofits: Would make nonprofits eligible borrowers for the Main Street Lending Program
• Emergency Paid Leave: Previous program would expand to include organizations over 500 employees
• For more information, please see the following:
  • National Council of Nonprofits Analysis for Nonprofits
  • Independent Sector Analysis for Nonprofits
  • House of Representatives One-Pager
  • House of Representatives Section-By-Section

 
Reviving the Economy Sustainably Towards a Recovery in Twenty-Twenty (RESTART) Act: A proposed bill to extend the loan forgiveness period for paycheck protection program loans made to those most affected.

• One page summary of the proposed bill
• Letter from the National Council of Nonprofits and Independent Sector

Work Opportunities and Resources to Keep Nonprofit Organizations Well (WORK NOW) Act: Proposed in the Senate several weeks ago, the bill would allocation $50 billion to frontline nonprofits to generation employment for laid-off workers from other industries, as well as address the skyrocketing needs in communities for COVID-19 relief and recovery. A vote has not yet been scheduled.
 
 

Additional Information

Paycheck Protection Program Official Report: SBA has released a PPP Report with data up to May 16, 2020. It details approved lending with state-by-state information. See report here.
 
Survey Results: Kansas City Nonprofits & SBA Loans
Through an online survey, we collected information from Kansas City nonprofits about their experience applying for SBA Loans. 168 nonprofits responded between April 23 and April 27. We’ve compiled the results so that funders, policy makers, and the wider community can understand more about the effectiveness of federal response for the charitable sector. See results here.  
 

Coronavirus Resources

Nonprofit Connect has compiled a list of considerations and resources for local nonprofits to be prepared, and we're updating the list daily. We're also providing virtual events for learning and connection. 

Each day brings new challenges. Remember the reason we were drawn to do this work is to make a difference, even in the face of opposition.