Question: My 501(c)(6) trade association applied for and received a PPP loan with the encouragement of our bank.I am now reading that 501(c)(6) organizations are not eligible to receive PPP funds. You are now eligible for full forgiveness of your PPP loan even if you also received an EIDL advance. There are risks for accepting a Paycheck Protection Program loan when the organization was not eligible to receive it. He recommended that organizations consult an August 2020 compliance supplement from the White House’s Office of Management and Budget, where organizations can look up specific federal assistance programs and find out the requirements. On December 27, the President signed into law the Consolidated Appropriations Act, 2021. Their findings, drawn from nearly 200 responses, indicate that of the 173 nonprofits that applied for the Paycheck Protection Program (PPP) loan, 59 percent were accepted. The Consolidated Appropriations Act of 2021 (P.L. The relief funds may have come from HHS based on a calculation of funding that they received as a third-party payer. A lot of federal programs will be subject to audit. However, should you receive the PPP Loan our understanding is that you can spend it on other bills. Borrowers of loans exceeding $150,000 will submit either the PPP Loan Forgiveness Form 3508 (long form) or the Form 3508EZ. The only nonprofit organizations eligible for PPP loans are 501(c)(3) and 501(c)(19) organizations. Like what you see? Available through December 17, 2020. This document is for informational purposes only, is not intended as legal advice, and does not substitute for consulting with a lawyer about specific facts and circumstances. The SBA will also allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support than previously calculated. PPP is a short-term loan designed to provide an incentive for small businesses and eligible nonprofits to keep their workers on the payroll. However, given the recency of the CARES Act, there is no traditional way of accounting for PPP Loans within nonprofit guidance. A single audit is an organization-wide audit of the financial statements and federal awards of … The Paycheck Protection Program is supposed to be “scoped out” of a single audit, he noted. “Business with less than 20 employees can apply for PPP loans and there are no competitions from the bigger businesses so their application should go … The feds have published a list of Paycheck Protection Program recipients. Companies, Nonprofits Across Northwest Suburbs Receive PPP Loans. o Allows small businesses assigned to the industry NAICS code 72 (Accommodation and Food Services) to receive PPP second draw loans equal to 3.5X average monthly payroll costs in order to helps these businesses combat onerous State and local restrictions. The NFP would still receive a benefit equivalent to the PPP amount minus the tax reduction (i.e. The Economic Aid Act amends the CARES Act to remove the requirement that borrowers subtract the amount of any EIDL advance (i.e., the $1,000 to $10,000 EIDL grant received from the SBA) from the PPP loan forgiveness to which the borrower is otherwise entitled. Museums are encouraged to seek legal and other expert advice on their specific circumstances. These new groups include 501c(6) organizations like chambers of commerce, nonprofits … Blogs. “We have a lot of people who've received a lot of federal funding,” said Lee Klumpp, a national assurance partner at BDO USA. SBA reopened the Paycheck Protection Program (PPP) for First Draw Loans the week of January 11, 2021.. On Thursday, April 23, 2020, Congress passed a bill providing additional funding to the Small Business Administration’s section of the CARES Act that applies to nonprofits. Payroll costs are capped at $100,000 per year for each employee (note: an employee’s cash compensation above $100,000 is not counted as part of the nonprofit’s payroll costs when calculating the amount of the loan, but the full cost of that employee’s benefits is counted). Hot Topic: PPP Loans & Endowments . Paycheck Protection Program (PPP) Loans to assist with cash-flow. Dozens of Crawford County businesses and nonprofits say the federal Paycheck Protection Program (PPP) has been essential in keeping employees working and paid during the COVID-19 pandemic. You have 10 months from the end of your covered loan period to submit your forgiveness application. Check the website of your existing bank or lending institution to determine if it is accepting PPP Round 2 applications. The stimulus legislation is to authorize $285 billion in additional guarantees and Schumer expects New York borrowers to receive about $20 billion in loans. documentation of the sum of all retirement plan funding paid by your nonprofit (excluding contributions from the employees). Organizations eligible for PPP2 draws, loans are limited to … The SBA will issue rules to extend this benefit to borrowers whose loans have already been forgiven and whose EIDL advance was deducted from the forgiven amount. Kelsey Sheehy February 22, 2021. What supporting documentation will I need to include with my application? Their loan representatives were well-informed and transparent about what’s really happening behind the scenes. Lumsden & McCormick promotes four; Oklahoma Society of CPAs announces 2021 Trailblazer and Path Finder award winners; and more CPA news. interest on mortgage obligations incurred before February 15, 2020; rent, under lease agreements in place before February 15, 2020; utilities (including electricity, water, gas, sewage, telephone, cell phone, Internet, and transportation costs), for which service began before February 15, 2020; operating expenses including payments for any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment, or tracking of payroll expenses; human resources; sales and billing functions; or accounting or tracking of supplies, inventory, records and expenses; costs related to property damage and vandalism or looting resulting from public disturbances that occurred in 2020 and that were not covered by insurance or other compensation; worker protection expenses including any operating or capital expenditures to adapt business activities to comply with government-issued COVID-19 safety guidelines (. (Special rules apply for entities that did not operate in 2019.) April 29, 2020. Changes to the PPP Loan Amount Formula. 480-839-4900 Login/Bill Pay. If the nonprofit can defer using its other government grants to cover payroll during its covered loan period (which begins the date of loan origination and ends on the date selected by the borrower between 8 and 24 weeks after loan origination), it should do so. For borrowers of loans exceeding $50,000, some reductions in workforce will not count against you for the purpose of loan forgiveness. The Economic Aid Act also authorized $15 billion for grants to live performance, museum, and movie theater operators that were forced to close due to the pandemic. More than half of nonprofits that submitted applications for Paycheck Protection Program (PPP) loans were accepted. Payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld. Lowenstein Sandler will not use or disclose your information except as stated in our privacy policy. Programs for safety and training and PPE are subject to audit. PPP loans have an interest rate of 1 percent. If you run one of the nonprofits that received 3.7 percent of all loans made under this program, there are several points you need to be aware of and some of them are time-sensitive. You must certify on the PPP loan application that “[c]urrent economic uncertainty makes th[e] loan request necessary to support [your] ongoing operations.”. Below is a non-exhaustive list of options to explore: To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.Â. Many participating lenders are only accepting applications from existing customers. No. Section 4003(d)(3)) Key Definitions Covered Period means the 24-week period following loan … The feds have published a list of Paycheck Protection Program recipients. The biggest reveal, however, is what’s not on the list: namely, adequate protection of paychecks. Religious organizations receiving loans of less than $150,000 received a total of at least $2.7 billion, putting the church bailout total at between $6.2 and $9.7 billion at a minimum. Nonprofits received almost 4 percent of all loans under the PPP, with 181,680 organizations receiving a loan out of almost 5 million total loans. Below are the businesses and non-profits that received loans between $5 – $10 million. For example, if you use PPP to cover payroll expenses you cannot use EIDL funds to also cover payroll. “Gross receipts” include the total amount the organization received from all sources during its annual accounting period, without subtracting any costs or expenses. Additional SBA guidance on how to calculate revenue reduction is available here. “There's a bunch of rules that make it difficult to just do a program-specific audit for just anybody in any situation,” said Klumpp. The Economic Aid Act makes available approximately $284.5 billion in new Paycheck Protection Program (“PPP”) funding and reopens the PPP for initial and second-draw loans on terms that are generally favorable to nonprofits. By. Accounting for PPP loans should be fairly straightforward for not-for-profits with calendar year ends because their loan forgiveness will occur in the same year as the covered period. A ‘wave’ of claims for the Domestic Production Activities Deduction sparks an alert. Nonprofit and for-profit organizations that received Paycheck Protection Program loans could unexpectedly find themselves confronting the “single audit” requirement for the first time, even though PPP loans are supposedly exempt. The International Federation of Accountants is partnering with the International Integrated Reporting Council on a joint initiative. You are eligible for a second-draw PPP loan if you have or will have used your first-draw PPP loan by the time you receive the second-draw PPP loan, have no more than 300 employees, and experienced a decline in gross receipts of at least 25% in any quarter of 2020 compared to the same quarter in 2019. The other thing is understanding where the money came from, what the source of those funds is, who the funding agency is. To learn more, please see our Cookies Policy for details. Section 501 (c) (3) and other non-profit organizations of any size are generally eligible for the EIDL program. “Make sure that your staff and yourself are properly trained,” said Klumpp. “There’s a church in my community that’s tied to another community-based organization and the two together have been working really hard every Saturday to give out boxes of food to families in need,” said Klumpp. Businesses and nonprofits across the northwest suburbs received loans from the federal Payroll Protection Program (PPP) to save jobs during the COVID-19 pandemic. The maximum PPP loan amount is 2.5 times a business’s average monthly payroll costs up to $10 million. This document does not constitute a solicitation, and your use of this document does not create an attorney-client relationship between you, the Pro Bono Partnership, and/or Lowenstein Sandler. If you are eligible for a Shuttered Venue Operators program grant, you should consider applying for that grant rather than a PPP loan because the terms of the grant are more flexible and the award is potentially larger. What we know about explosion in … Question: My nonprofit has received first and second draw PPP loans, but has not yet applied for PPP loan forgiveness.Last year when we first received the PPP loan, it was my understanding that we could not also receive employee retention tax credits. The government considers religious organizations to be eligible for loans under the Paycheck Protection Program. The SBA has gone on the record with the American Institute of CPAs saying that PPP loans won’t be subject to single audit requirements. Section 501 (c) (3) tax-exempt organizations, including churches, other religious houses of worship, and other nonprofits are eligible for PPP loans if they have 500 or fewer employees. 9. Eligible organizations must have fewer than 300 employees, have used or will soon use the entire amount of their first PPP loan, and have experienced a decline in gross receipts of at least 25% during any quarter of 2020, as compared to the same quarter of 2019. Contact legal counsel to help you evaluate your options. The information shared here is based on the best available information as of publication. There are a lot of tools out there, so people need to educate themselves.”. Last 12 months of payroll reports beginning with your last payroll date, including: gross wages for each employee, including the officer(s) if paid; family medical leave pay for each employee; state and local taxes assessed on the employee’s compensation for each employee; documentation showing the total of all health, dental, vision, life and disability insurance expenses paid by your nonprofit for your employees; and. “It’s not subject to the single audit,” said Klumpp. The 501 S(c)ene The latest view on not-for-profit accounting issues Subscribe to "The 501 S(c)ene" by email or via RSS. Choose the period that reflects the largest payroll costs if you want to maximize your loan amount. For PPP loans made before June 5, 2020, the loan amount not forgiven will be due within 2 years of when you received the money. PPP loans are part of Congress’ multi-trillion-dollar effort to shore up the economy as the virus tears it down. In addition to a first- or second-draw PPP loan, you may be eligible for other types of relief. The following data was provided by the SBA & US Treasury Department showing a breakdown of all the companies who received loans over $150,000. To increase the likelihood that your loan application will be processed, you may wish to apply with a smaller bank that is accepting applications from new customers such as Northeast Bank or Old Dominion Bank, or a FinTech company such as PayPal. So long as the nonprofit itself pays the staff member’s compensation (meaning that the government does not pay the staff member directly), the whole of that compensation should be included when calculating average monthly payroll costs in the first part of the PPP application. CARES Act Paycheck Protection Program (PPP) loan funds available to nonprofits and small businesses impacted by COVID -19 . Nonprofits should also talk with their accountants about preparing for the possibility of being audited and make sure they have the necessary documentation. Nonprofits that received at least $1 million in loans include the American Public Transportation Association, which has spent $430,000 on lobbying in … “It’s not hard to get over $750,000 when we’ve been out as long as we’ve been out. Nonprofit PPP Loan forgiveness – How Does it Work? Coronavirus/COVID-19: Facts, Insights & Resources. Nonprofit and for-profit organizations that received Paycheck Protection Program loans could unexpectedly find themselves confronting the “single audit” requirement for the first time, even though PPP loans are supposedly exempt. PPP Nonprofit Loans – We Just Met With Two Approved Lenders is a summary of our nonprofit’s meetings with two major SBA 7(a) approved lenders (well-known banks) to compare their processes and product. This level of novelty naturally causes some confusion. How should I treat the portion of my payroll already covered by other government grants? Once you’ve applied for and received a PPP loan, you must spend the loan on approved expenses in order for it to be eligible for forgiveness. The Paycheck Protection Program (PPP) has provided nearly 4.9 million loans to American businesses. “The first thing that organizations should do, whether they’re not for profit or for profit, if they haven’t done so already, is they need to have a conversation with their auditors or accountants to make sure they understand what the requirements are,” said Klumpp. $10,000 advance forgiven even if borrower denied EIDL loans. "If it’s material on the compliance side and in the financial statements, that could trigger a single audit.". Loan recipient data through August 20, 2020 is available on the SBA website. The application period for PPP Round 2 loans will end on March 31, 2021. you fire an employee for cause; an employee voluntarily resigns; or an employee voluntarily requests and receives a reduction in hours. Various programs for health and human services are subject to audit. “When you think about it, if you've got an organization that receives over $750,000 to trip this threshold, then they have to have this compliance audit done,” said Klumpp. The “EZ” loan forgiveness application may be submitted by borrowers who can satisfy any of the following requirements: You will not have to start making payments on the loan until after you submit your forgiveness application, and the SBA pays the forgiveness amount to the lender.