Latest News on PPP, Main Street Loans, SBA EIDL Loans, and Arts Education Advocacy
June 17, 2020
SBA Issues PPP Flexibility Rules! Reminder: Loan Application Deadline June 30
The Small Business Administration has released new rules implementing the provisions of the Paycheck Protection Program Flexibility Act, available here (PDF). While more guidance may soon follow, the rules include some helpful clarification, including confirmation that borrowers with less than 60% of expenditures dedicated to payroll will be eligible for partial loan forgiveness.
With more than $100 billion remaining in Paycheck Protection Program (PPP) resources, any potential applicant should take note that the opportunity to apply for a loan closes on June 30, 2020.
Meanwhile for those orchestras that have already received a PPP loan, many may be nearing the completion of their loan period and should be aware of significant developments regarding the loan forgiveness application process and related League resources:
- View the recording and slide presentation from the League’s June 5 webinar on the loan forgiveness process, including an overview of the Flexibility Act.
- Make note that new interim final rules on the PPP Flexibility Act (PDF) clarify that borrowers with payroll expenses of less than 60% of loan funds will be eligible for partial loan forgiveness.
- Stay tuned for more guidance to be issued by the SBA in the coming weeks as the agency continues to interpret the terms of the PPP Flexibility Act and revises the loan forgiveness application form.
The League’s Paycheck Protection Program resources will continue to be updated as new information becomes available.
Arts Education Is Essential – Take Local Action
Late last month, the League joined a group of more than 50 national organizations that collaborated to issue a statement of support for arts education particularly in the context of COVID-19. The message in “Arts Education Is Essential” (PDF) highlights some of the key benefits of arts education that are of critical value now more than ever: social and emotional well-being of students, a welcoming learning environment that encourages student expression in a safe and positive way, and a well-rounded education for all students. With extremely challenging public education funding forecasts at the local, state, and federal level, it is critical to step up advocacy in support of music education in local schools. Review the growing list of national signatories to find local stakeholders that can be strong partners in education advocacy efforts.
This statement is the latest in the League’s coalition efforts on advocating for arts education. Visit our Music Education Advocacy Tools for a wide array of resources, and don’t forget to check whether your orchestra has signed onto our statement of common cause, Orchestras Support In-School Music Education.
SBA Re-Opens Economic Injury Disaster Loan Program for New Applicants
The SBA announced this week that it has reopened its Economic Injury Disaster Loan (EIDL) program, offering long-term, low interest assistance for small businesses with fewer than 500 employees, including nonprofit organizations. EIDL assistance can be used to cover payroll, pay debt, or fund other expenses that are not already covered under a Paycheck Protection Program loan. Additionally, the EIDL Advance will provide up to $10,000 ($1,000 per employee) of emergency economic relief that does not have to be repaid. Loans are administered by the U.S. Treasury, and applications are made directly to the SBA. Further information is available in the SBA press release and the EIDL loan application portal.
Nonprofit Main Street Lending Program Proposed
The Federal Reserve announced this week that it is inviting public comments on a Main Street Lending Program, specifically designed for nonprofits. The League and its member orchestras, together with partners in the nonprofit sector and leaders in Congress, have called for implementation of loan opportunities for nonprofits since such a program was authorized under the CARES Act. The minimum loan size for the 5-year loans is $250,000 while the maximum loan size is $300 million. Principal payments would be fully deferred for the first two years of the loan, and interest payments would be deferred for one year.
Eligibility requirements include:
- Minimum of 50 and maximum of 15,000 employees
- Financial thresholds based on operating performance, liquidity, and ability to repay debt
- An operational history of at least five years
- 2019 revenues from donations that are less than 30% of total 2019 revenues
- Nonprofit organizations that have received PPP loans are permitted to borrow under the program.
Further details regarding the proposed terms of the loans are available in the Overview of New Nonprofit Loans (PDF) and in the Federal Reserve’s press release. The Federal Reserve says “public feedback is being sought to help make the proposed program as efficient and effective as possible.” Feedback may be submitted via email here until Monday, June 22. The proposed limitation on the allowable percentage of revenue from donations, the 90-day liquidity requirements, and other provisions will be a barrier for many prospective applicants. The League will be collaborating with the wider nonprofit sector on a response, and is also asking Congress to enact legislation in the next COVID-19 relief package that would add a forgivable option for these loans to nonprofits.