Even as Congress and the White House rapidly undertake work on the next COVID-19 federal relief package, provisions signed into law at the end of 2020 are still being unpacked as the fine print on implementation emerges. The Consolidated Appropriations Act was enacted on December 27, 2020 and makes more than $900 billion in new COVID-19 resources available.
Federal agencies are responsible for interpreting and implementing key relief provisions, and full guidance is still emerging. The League of American Orchestras has been tracking developments and is posting updated information and direct links to federal guidance in its full 2021 COVID-19 Relief Summary. Here are some highlights.
Shuttered Venue Operators Grant (aka Save Our Stages)
The Small Business Administration will implement a new $15 billion grant program to support “shuttered venue operators.” Orchestras may qualify to apply, even if they do not own their performance space. All applicants must choose whether to pursue a Paycheck Protection Program (PPP) forgivable loan or a Shuttered Venue Operators Grant (SVOG) in 2021. Submitting an application for the PPP program in 2021 will disqualify an organization for SVOG eligibility.
SVOG applicants must demonstrate a minimum 25% decline in gross earned revenue in one calendar quarter of 2020, compared to the same quarter in 2019, to qualify to apply. The maximum grant amount is based on 45% of an entity’s gross earned revenue in 2019, with a maximum award of $10 million. Allowable expenses include payroll, including payments to independent contractors; rent; fixed costs like mortgage and debt payments; as well as maintenance expenses, administrative costs, and other expenses.
The program will include two priority application periods, once the application process is open. In the first 14 days, SBA will issue grants to applicants that demonstrate a revenue decline of 90% or more from April 1 to December 31, 2020, compared to the same time period in 2019. The second 14 days will be limited to those with a revenue decline of 70% or more. The SBA updated its Frequently Asked Questions on February 28 to specify that the required priority period declines will be calculated using an entity’s gross revenue. The scope of revenue taken into consideration is important as nonprofits determine whether they may have access to the priority period, due to ongoing contributed revenue received throughout the pandemic. The SBA intends to provide more details to confirm these definitions.
It is unclear how quickly the $15 billion in SVOG funding may be exhausted either in the priority periods or throughout the full administration of the program, as eligibility is open to a range of nonprofit and for-profit entities, including independent motion picture theatre operators, museum operators, promoters, and talent representatives.
Timing for opening the application process is uncertain. SBA will provide further web updates and video guides about the grants, who can apply, how potential organizations can prepare, and additional details regarding eligibility and applications.
- SBA webpage on Shuttered Venue Operators Grant
- SBA Shuttered Venue Operators Grant FAQs (Updated February 28, 2021)
Paycheck Protection Program (PPP)
More than $280 billion in new PPP relief is now available, including a second opportunity to apply for forgivable loans, accessible through March 31, 2021. The SBA has opened the 2021 PPP to all applicants, and has issued initial guidance, including revisions to the loan forgiveness process and opportunities to apply for a second round of forgivable loans. As of February 21, 2021, more than $140 million of new PPP loans had been approved. Starting on Wednesday, February 24, a 14-day period began during which Paycheck Protection Program applications will only be accepted from applicants with fewer than 20 employees and sole proprietors. The SBA is also rolling out a new funding formula meant to better support sole proprietors, independent contractors, and self-employed individuals.
The overall terms for loan forgiveness are now more flexible, as borrowers will be eligible for loan forgiveness equal to the amount of allowable costs spent during a period of their choosing, between 8 and 24 weeks following the origination date of the loan. Meanwhile, many are still awaiting the outcome of loan forgiveness applications for the first round of loans, as lenders and the SBA have shifted attention to new loan requests.
A second draw of forgivable loans of up to $2 million is now available to employers with a workforce that does not exceed 300 employees and that can demonstrate at least a 25% gross receipts decline in any quarter of 2020, compared to 2019. As with the first round of PPP, loan amounts equal 2.5 times average monthly payroll costs.
- PPP Overview Page and Links to First Draw, Second Draw, and Loan Forgiveness Guidance
- Data on 2021 PPP Loans Approved
Employee Retention Tax Credits (ERTC)
The Employee Retention Tax Credits (ERTC) created under the CARES Act are refundable payroll tax credits accessible to nonprofit organizations and are now significantly expanded.
The 2020 credit applied to 50% of qualified wages, up to $10,000 in wages/year, and PPP recipients were previously ineligible to access the ERTC. The 2020 ERTC is now retroactively available to 2020 PPP recipients for certain wages not covered by PPP forgivable loans.
The 2021 credit is valued at 70% of qualified wages, up to $10,000 in wages/quarter per employee for the first two quarters of 2021, amounting to up to $14,000 in refundable payroll tax credits per employee. Employers that receive Paycheck Protection Program loans in 2021 will qualify for the expanded ERTC for wages that are not also covered by a forgivable PPP loan.
Complete guidance on the ERTC is still awaited. In the meantime, the IRS has issued an initial overview, and the 2019 FAQs are a good starting point for becoming more familiar with this provision.
- IRS January 27 ERTC Announcement
- Background FAQ on 2019 ERTC (to be updated)
Paid Sick and Family Leave
The refundable payroll tax credits for paid sick and family leave that were established in the Families First Coronavirus Response Act, are extended through March 31, 2021.
Pandemic Unemployment Assistance and Compensation
Pandemic Unemployment Assistance will be extended, providing federal unemployment benefits for self-employed and gig workers who are affected directly by the pandemic but are not typically eligible for state unemployment benefits. Federal Pandemic Unemployment Compensation benefits that expired earlier this year are reinstated at $300 per week, through March 14, 2021. An extra $100 per week will be available for workers who have both W-2 and self-employment income but whose base benefit calculation doesn’t take their self-employment into account.
The League of American Orchestras will continue to update its 2021 relief overview online as more information becomes available, and is partnering with arts advocates nationwide to speak up in support of additional COVID-19 relief opportunities in the coming weeks and months.
Note: the author is Vice President for Advocacy for the League of American Orchestras.
This article was updated March 2, 2021, to reflect recently announced modifications to the SVOG and PPP programs.