USAE News Discusses SBA’s Updated Nonprofit Paycheck Protection Program Guidance Based on Venable’s Client Alert

2 min

On March 15, 2021, USAE News provided commentary on the Small Business Administration’s (SBA) updated nonprofit Paycheck Protection Program (PPP) guidance based on a Venable alert by George Constantine,  Cindy Lewin, and Andrew Steinberg.

The SBA released updated guidance clarifying what Venable characterized as “key compliance questions for nonprofits,” including the definition of “lobbying activities” for 501(c)6 organizations. SBA explained that the definition of “lobbying activities” set forth in the Lobbying Disclosure Act (LDA) should be used by Section 501(c) (6) organizations for purposes of determining their eligibility for PPP loans.

501(c)(6) organizations are PPP eligible if they are not engaged in significant lobbying activities, meaning no more than 15% of revenues are received from lobbying activities; no more than 15% of total activities are lobbying activities; and lobbying activity costs did not exceed $1 million during the most recent tax year ending prior to February 15, 2020. Employees cannot exceed 300, and professional sports leagues, political campaigns, and political activities organizations are not eligible.

Venable said the LDA definition is significantly different from and far narrower than the tax code’s definition of lobbying, which may be good news for many 501(c)(6) organizations. “Critically, the LDA does not require organizations to report state lobbying and grassroots lobbying expenses,” the firm said. “Thus, many state-based and locally based 501(c)(6) organizations and national 501(c)(6) organizations that frequently conduct state, local, or grassroots lobbying have a better chance of qualifying for a PPP loan than they would have if a different definition had been applied.”