Coronavirus Relief Package at a Glance for Nonprofits

The Consolidated Appropriations Act, 2021, passed by Congress and signed by President Trump, is a $2.3 trillion spending bill that combines a nearly $900 billion coronavirus aid package with additional aide to nonprofit organizations.

The emergency coronavirus relief package – the bill’s focal point for many Americans – aims to bolster the economy, provide relief to nonprofits, specifically including 501(c)6 organizations, provide an extension of charitable contributions, provide relief to the unemployed, deliver checks to individuals, and provide funding for COVID-19 testing and the administration of vaccines (among other things). 

The legislation also includes the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, an extension and enhancement of the Paycheck Protection Program.

Below are a few key elements receiving a lot of attention from the nonprofit community: 

  • A second round of PPP funding has been established – that includes availability for 501(c)(6) organizations! 
    • Eligibility and calculation of the total loan amount is fairly consistent with PPP Round 1.
      • 501(c)(6), destination marketing organizations, and housing cooperatives now may be eligible for PPP loan funding.
      • Employers must have 500 or fewer employees to qualify (300 or fewer if they received Round 1 funding).
      • Organizations are not precluded from PPP Round 2 if they were denied or did not apply for Round 1.
      • Organizations who took advantage of the Employee Retention Tax Credit may now qualify.
      • Generally the loan amount is 2.5 x the borrower’s average monthly payroll costs. (generally use the previous 12 months average for calculation, some adjustments may apply)
  • Organizations that received Round 1:
    • Must have seen a reduction in gross receipts of 25% or more for any quarter compared to the same quarter in 2019.
    • All funds from the first round of PPP loans must be exhausted before an additional PPP application is allowed.  
  • Related to forgiveness:
    • New borrowers have until the end of the covered period (up to 24 weeks) to restore a reduction in their employees.
    • The loan forgiveness period begins on the date of loan origination and end between 8 and 24 weeks after origination.
    • The bill provides additional cost allowability for things such as property damages, worker protection expenses, cloud computing, and other operational expenses.  
      • ** maintaining that no more than 40% of the forgiven amount can be used for non-payroll costs for forgiveness.
  • For those of you with a for-profit subsidiary or related organization, the bill provides much needed clarification that Paycheck Protection Program (PPP) Round 1 forgiveness is not taxable and those expenses used in the forgiveness calculation are deductible.
  • The maximum loan amount is $2 million.

The Maner Costerisan team is committed to continual updates and outreach as interpretations are provided and additional guidance is issued to ensure we provide the most timely and accurate insight on how the legislation could impact your organization.

If you have immediate questions, contact Brandy Terwilliger, CPA, bterwilliger@manercpa.com.

 

The details contained in this post is information and guidance as of December 29, 2020. Please visit manercpa.com/COVID for updates.


Join Maner Costerisan’s Virtual Expert Panel Q&A Session Discussing the New Stimulus Package

Friday, January 8 at 10 a.m.

The Coronavirus Relief Bill, signed by President Trump late Sunday night, offers additional measures aimed at providing much-needed assistance to businesses. With the 5,500-plus page document comes a lot of questions.

On Friday, January 8 at 10 a.m., Maner Costerisan will host an expert panel to answer many of your questions and discuss how this new legislation impacts you and your business. This virtual discussion will feature a brief overview followed by an open dialog with participants. Join us for this important discussion.

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