Nonprofits that are newly eligible for the second draw of the Paycheck Protection Program (PPP) will have an additional two months to apply for the relief funds.
Bharat Ramamurti, deputy director of National Economic Council (NEC), explained the economic implications during a webinar convened by the White House Office of Faith-Based and Neighborhood Partnerships, with the National Council of Nonprofits and more than 5,000 nonprofits from across the country.
By a 92-7 vote on Thursday, the U.S. Senate passed a two-month extension of the PPP deadline through May. It had been set to expire March 31. The Small Business Administration (SBA) will have an extra month — through June — to process applications. President Joe Biden is expected to sign the legislation.
The webinar on Thursday afternoon also featured former Louisiana Congressman Cedric Richmond, director of the White House Office of Public Engagement, and Melissa Rodgers, executive director, and Josh Dickson, deputy director of the faith-based office, to discuss the substance of the American Rescue Plan (ARP), the $1.9-trillion pandemic relief bill passed by Congress, and what it means for charities.
“We’re in a deep hole right now,” Ramamurti said, some 9.5 million jobs short compared to before the coronavirus pandemic, with one in seven families experiencing hunger and millions of families behind on their rent, facing potential eviction. In addition, 400,000 small businesses have closed and 10 million children are living in poverty. “That’s why we need a big response, because we’re dealing with a big hole,” he said.
“People find themselves in this position through no fault of their own,” Richmond said during the 30-minute webinar. “When it’s beyond the capacity for individuals to fix, the White House and government has to play a part in it,” he said.
The PPP deadline extension is vitally important, according to David Thompson, vice president of public policy at the National Council of Nonprofits. “All the work put into advocating for expansion of the PPP to larger nonprofits would have been lost without this extension,” he said.
The rescue plan expanded the PPP to cover larger nonprofits and provide “a significant source of aid for some of those nonprofits serving their communities but not able to access existing small business or other aid programs at the moment,” Ramamurti said.
The change expanded eligibility to nonprofits that have multiple locations but no more than 500 at a single location, such as YMCAs. The rules used to be that if an organization collectively had 500 employees across locations it was not eligible; that was changed to 500 at a specific location.
Those types of nonprofits were eligible for up to $10 million in the first draw of PPP and would be eligible for the second draw if they meet revenue decline criteria and slightly smaller employee threshold of 300 at a particular location.
To be eligible for the second draw of the PPP, organizations must show a 25% reduction in revenue compared to the same quarter a year ago. For organizations that don’t meet that threshold, there are still “significant relief options available,” Ramamurti said. The Employee Retention Tax Credit (ERTC) can cover “a significant chunk of payroll costs” — up to $7,000 per employee per quarter.
On top of the Paycheck Protection Program (PPP), there is $60 billion in aid to small business and significant expansion of the child tax credit, in combination with other elements, that would cut child poverty in half, Ramamurti said.