September 30, 2020
Late Monday, House Democrats announced a revised, $2.2 trillion HEROES Act to provide COVID relief. We’re thrilled to inform you that the bill would expand the Paycheck Protection Program to all 501(c) nonprofits of any size! Thank you for your relentless advocacy, which is a huge reason for this and other positive developments.
Great news indeed, but the news isn’t all sunshine. The package also includes the vague and harmful lobbying language, originally seen in the Senate, that would apply a 10-percent eligibility threshold for lobbying. In short, if your organization lobbies – even just a little, and including at the state and local levels – it may be ineligible for a PPP loan.
Why this Language is a Problem
Ten percent is an extremely low threshold that will hurt countless organizations, but the language also presents harm to associations and others that don’t lobby much or at all. Here’s why we’re concerned:
- No matter what, even for qualifying organizations, this new implementation process will lead to administrative burden and delay in receiving loan funds. We’ve been kept out of the PPP since March and cannot afford any more time without help.
- There are no clear definitions in the bill that apply to “lobbying receipts” or “lobbying activities.” Sure, we can assume what the Small Business Administration (SBA) – the agency in charge of the PPP – would consider as “receipts” or “activities,” but we simply don’t know. Without explicit direction from Congress, SBA will have the flexibility to establish its own definitions and criteria if it so chooses.
- As with the definitions described above, we don’t know what timeframe SBA will use to consider “receipts” and “activities.” Again, SBA would have the flexibility to determine its own timeframe, which could keep out deserving organizations if their finances are skewed due to COVID.
- These eligibility restrictions apply to all applicants(except 501(c)(3) orgs with 500 or fewer employees).
- Lastly, this is a continued attack on the essential pillars and purpose of associations and other 501(c)(6)s. A major reason we were restricted from the PPP in March was a widespread misconception in Congress that our community only exists to influence public policy. Our organizations exist to advance industries and professions across the entire economy, and in many cases that includes lobbying but myriad other services as well. The PPP was created to sustain the very industries and professions we exist to support – but we were kept out for doing just that.
Will this Legislation Actually Pass?
House Democrats plan to vote on the package today or tomorrow, with or without Republican support. Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin have spoken multiple times this week, so there’s a chance, but the bill’s price tag must shrink significantly for any prospect of an agreement with Republicans. POLITICO reports Secretary Mnuchin will provide a counter proposal, so stay tuned for more information.
- Second round of PPP loans for employers with 200 or fewer employees that can demonstrate sufficient loss in gross receipts;
- Expanded and clarified Economic Injury Disaster Loan program; and
- Significantly expanded Employee Retention Tax Credit.
The package also includes another round of individual stimulus checks, renewed unemployment benefits and state and local aid, among many other provisions.
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