The Paycheck Protection Program adds 501 (c) (6) s to eligibility


Summary of 501 (c) (6) Eligibility for Expansion of PPP Package to Pandemic Relief Package

The last pandemic aid package restarts the Paycheck Protection Program (PPP) and extends PPP eligibility to 501 (c) (6) s. The language begins on page 2102 (in the PDF) and can be found here. The authority to issue new PPP loans ends on March 31, 2021. We expect the Pandemic Relief Act to go into effect this week.

501 (c) (6) organizations are eligible for a PPP loan provided that:

  1. You are not a professional sports league or organized for the purpose of promoting or participating in a political campaign (note: this does not affect chambers of commerce or trade associations);
  2. You do not employ more than 300 people;
  3. They do not derive more than 15% of their income from lobbying activities;
  4. Lobbying activities do not account for more than 15% of the total activities of the organization; and
  5. The organization’s lobbying costs did not exceed $ 1,000,000 for the final tax year ended prior to February 15, 2020.

If an organization fails any of these tests, it will NOT be eligible for a PPP loan.

Similar rules apply to destination marketing organizations.

Lobbying activities are not defined in this section. The Small Business Administration can provide definition or guidance. Congress officials used the information available on Tax Form 990 to discuss the impact of limiting lobbying activities to 15%. In particular, the employees compared the lobbying expenditures reported in Appendix C, Part III-B, Line 2 with the total expenditures reported for the year (page 1, line 18). (Note that these lines may be different when using a 990 form versus a 990EZ.)

Without further guidance, companies may want to analyze their past 990s to determine if they are eligible for a PPP loan application and may want to proceed with their lender if they think they qualify.

The bill also expands the permitted uses for PPP funds and simplifies the loan process. We will provide separate information on the other PPP changes.

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