American Rescue Plan Act Relief For Nonprofits

President Biden just signed into law the American Rescue Plan Act of 2021, which provides much needed financial relief for nonprofit organizations. This new stimulus package sends immediate relief to nonprofits and businesses, as well as – stimulus payments to individuals and qualifying families. In addition, the bill expands unemployment benefits, rental assistance, and much more. Here are some of the provisions that benefit nonprofits:

It boosts the Paycheck Protection Program (PPP) by $7.25 billion

Nonprofits with over 500 employees that were previously excluded from the previous Paycheck Protection Bill are now eligible provided they have fewer than 500 employees in each of their locations. It also expands PPP eligibility for other types of nonprofits, but with a 300-employee limit per location.

Note that there are no changes to PPP loan eligibility. Unless extended by Congress, the application deadline is March 31, 2021. If your nonprofit organization needs assistance, we advise you to apply for this latest round of PPP immediately.

Shuttered Venue Operators Grant (SVOG)

The ARP adds $1.25 billion to the initial $15 billion in shuttered venue operators grants, which are administered by SBA and funded under the Consolidated Appropriations Act. SVO was initially established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

Entities eligible for SVO include live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives. Eligibility also extends to venues run by state or local governments such as museums.

Note that even if your nonprofit applied for and received a Paycheck Protection Program loan in July 2020, you are still eligible to apply for SVOG.

Economic Injury Disaster Loan (EIDL)

The bill includes $15 billion in loans for small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. It instructs the Small Business Administration to spend $10 billion in payments to cover payments to entities that did not receive the full amounts to which they were entitled. The remaining $5 billion covers entities that have suffered economic losses of at least 50% and have 10 or fewer employees.

Unemployment Relief for Government Entities and Nonprofit Organizations  

It extends the federal coverage for a portion of unemployment costs by 50% through March 31 and 75% from April 1 through September 6, 2021.

Employee Retention Tax Credit (ERTC)

The ERTC is a refundable tax credit in 2020 for eligible employers’ portion of Social Security or Payroll taxes. It was designed to provide financial incentives to keep employees on the payroll. This bill extends Employee Retention Tax Credit through December 31, 2021.

The definition of a large employer now includes employers with over 500 full-time employees. This means that more nonprofits are eligible.

Family and Sick Leave Tax Credit Extension

The refundable payroll tax credits for paid sick and family leave now extend through September 30, 2021. Your nonprofit may now claim up to $12,000 per employee. Expanded leave now covers obtaining vaccinations and any resulting injury or illness related to vaccination.

The American Rescue Plan does not reinstitute the mandate to provide leave or require employers to provide any additional leave.

Additional Provisions of The American Rescue Plan Act

• Aid for state, local, tribal, and territorial governments. It advocates that the government uses funds provided to establish grants for nonprofits, reduce unemployment costs, and fulfill grants and contracts with nonprofits for services.
• Recovery rebates to individuals
• Nutrition assistance
• Health
• Education
• Cultural
• Volunteerism
• Housing

Nonprofit Eligibility for American Rescue Act

Paycheck Protection Recipient

First draw PPP borrowers may be eligible to apply for second draw PPP loans. They may also apply for Shuttered Venue Operators Grants if they received a PPP loan prior to December 27, 2020. They may apply for an Economic Injury Disaster Loan.

Note that if your nonprofit is applying for EIDL and PPP, funds cannot be used for the same purpose/costs.

Shuttered Venue Operators Grant Recipient

SVOG recipients are not eligible to apply for a PPP loan. However, recipients may be eligible to receive a supplemental SVOG award.

SVOG recipients may apply for EIDL. However, funds cannot be used for the same purpose/costs.

COVID-19 EIDL Recipient

EIDL Recipients may apply for PPP, EIDL, and PPP. Funds cannot be used for the same purpose/costs.

For more information on the provisions and eligibility, please visit sba.gov. We advise you to start the application process immediately by clicking American Rescue Act Plan Application.

Written By Franklin Asongwe