Guest post by Jacob Levine, the founder of Chorus Connection and a proud member of the NYC Gay Men’s Chorus. Article reposted with permission from Chorus Connection. See the original post here.
On December 27, 2020, after a tumultuous political rollercoaster, the President signed into law another COVID stimulus package as part of an omnibus spending bill, the Consolidated Appropriations Act 2021. The 5,600 page bill contains nearly $1 trillion in pandemic relief, including four funding opportunities for which your chorus may be eligible.
Note: This blog is only relevant for organizations based in the U.S.
What’s Happening Right Now?
Once a bill like this is passed, the next step is that the Small Business Administration (SBA) must issue official guidance — in the form of Interim Final Rules (IFRs) — on exactly how the administration plans to implement the new law. The SBA released two initial IFRs on January 8 about the Paycheck Protection Program (PPP): general guidance for all PPP loans and specific guidance for second draw loans. Additional information is not yet available for the non-PPP programs mentioned in this blog.
In the meantime, below is a list of the funding opportunities and what you need to know now.
Grant #1: PPP Second Draw Loans
- You’ll soon be able to apply for a second PPP loan.
- These are forgivable loans up to 2.5 times your average monthly payroll expenses (capped at $2 million).
- Applications opened Wednesday, January 13 through community financial institutions. Financial institutions with $1 billion or less in assets can start accepting applications on Friday, January 15. All other institutions can start accepting applications on Tuesday, January 19. Some of these larger institutions have created “pre-applications” to get folks started in the meantime.
The Paycheck Protection Program (PPP) was first created as part of the CARES Act in April 2020 to help small and mid-sized organizations maintain payroll in the midst of pandemic chaos and lockdowns. Loans made under this program can be partially or fully forgiven, which is why I refer to it as a grant program. The new bill added over $280 billion to the program, and — drumroll, please! — allows many folks who’ve already received a loan to apply for a second one. Loan terms (interest rate, term length, etc.) are largely identical to first draw loans. Check out Chorus Connection’s April 2020 blog for more info.
Note: The April blog has not been updated to reflect changes enacted in June 2020 when Congress passed the PPP Flexibility Act. That law gave recipients 24 weeks (originally 8 weeks) to accrue covered expenses for which they could receive forgiveness. That bill also required 60% (originally 75%) or more of the loan to be used for payroll costs, otherwise it would impact the amount for which you could be forgiven. Those numbers (24 weeks and 60%) still apply, including for second-draw loans.
Who can apply for a second draw PPP loan?
You’re eligible to apply if you meet the following criteria:
- You have fewer than 300 employees.
- You experienced a drop in “gross receipts” of 25% or more in at least one quarter in 2020 compared with the same quarter in 2019. For non-profits, calculate “gross receipts” in the same manner you calculate revenue for your annual returns.
- You must have used all of the first loan to apply for a second one.
If we’re eligible, is there any reason not to apply for a second PPP loan?
In addition to allowing second draw PPP loans, the new bill also includes a section called the Save Our Stages (SOS) Act that provides funding for a wide variety of cultural organizations. You cannot apply for both a second draw PPP loan and an SOS grant. See the section below on the SOS program and compare to determine:
- Does your organization qualify for either program? Both programs?
- If both, which one offers greater support?
How do we apply for a second draw PPP loan?
You should be able to apply through the same bank where you received your first draw loan. If you do, and if you use the same payroll reference period for calculating the loan amount that you did the first time around, the bank may be able to reuse your supporting documentation already on file, making the application process even easier.
What if we want to use a different bank?
That’s fine too, but there may be additional paperwork involved since the new institution won’t already have your supporting documents on file.
Also, if you’re looking to apply through a different bank but don’t know where to go, check out Cross River Bank. We (Chorus Connection) had an excellent experience working with them back in April and you don’t need to be an existing customer to apply through them. Plus, they’ve already opened a pre-application (see their homepage) to get you started.
What documentation do we need to prove our revenue dropped 25%? And when do we submit that information?
According to the SBA’s second draw IFR (page 16), documentation for this eligibility requirement “may include relevant tax forms…or, if relevant tax forms are not available, quarterly financial statements or bank statements.”
If you’re applying for a second draw loan of more than $150,000, you’ll need to supply the above documentation during your initial application. If you’re applying for $150,000 or less, you can choose to delay submission of the above documentation until you’re ready to apply for loan forgiveness.
Has anything changed for calculating second draw loan amounts?
Yes! The new bill allows you to include group life, disability, vision, and dental insurance when calculating payroll costs. This expansion may allow you to apply for a slightly larger loan this time around. Note: This expanded definition also applies when calculating forgiveness amounts for both first and second draw loans.
Any changes regarding forgiveness for first or second draw loans?
Yes! Lots of good news here:
- If you received an Emergency EIDL Grant in addition to a PPP loan, you no longer have to deduct your Emergency Grant amount from your first draw PPP loan forgiveness amount. If you already applied for forgiveness, the SBA’s IFR (page 60) states “EIDL Advance Amounts previously deducted from a borrower’s forgiveness amount will be remitted to the lender.” In other words, it sounds like this should happen automatically, but might be worth checking with your bank just in case.
- I know some folks chose not to apply for an EIDL Emergency Grant back in the spring because of the original deduction in PPP forgiveness. If your organization made that choice, you should immediately apply for the EIDL Emergency Grant now. See the section below for updates about the Emergency Grant program.
- For smaller organizations with first and/or second draw loans of $150,000 or less, there will now be a simplified forgiveness application that is only a single page in length.
- Previously, you could only apply for forgiveness for the following expense categories: payroll costs (must be at least 60% of loan amount), mortgage interest, rent, and utilities. The new bill added the following categories of forgivable expenses: business software and cloud computing services (like Chorus Connection and Zoom), property damage (related to public disturbances in 2020, and that weren’t covered by insurance), payments to suppliers (with various restrictions), and worker protection expenses (including personal protective equipment). See the SBA’s guidance for more information on each of these categories (pages 49-50).
What if we never got a PPP loan?
$35 billion in the new bill is earmarked for first-time PPP loans. Provided your organization qualifies, it’s not too late! Check your bank’s website for information right away. And if you have trouble applying through them, check out Cross River Bank.
Is it possible the new PPP funding will run out?
Yes, that is absolutely possible, and actually happened with the first round of PPP funding in April before the program received additional funds later in 2020. That said, at least $25 billion in the new bill must be given to organizations that either: 1) have 10 or fewer employees, or 2) are in low- or moderate-income neighborhoods and are seeking up to $250,000. In short, there are protections for smaller organizations, but the best way to ensure funding for your organization, regardless of whether you qualify for the above earmark, is to apply ASAP.
Grant #2: Save Our Stages (SOS) Grants
- Grants up to 45% of 2019 gross earned income (capped at $10 million).
- Applications not yet open. Awaiting SBA guidance.
The new bill includes a section titled Grants For Shuttered Venue Operators, also known as the Save Our Stages (SOS) Act. This section provides $15 billion in funding for various types of cultural institutions that have been devastated by the pandemic, including “live performing arts organization operators.” This term appears to apply to arts presenters, even if they don’t own or operate their own venue.
Note: The SBA has not issued its guidance yet on the SOS program, so be aware the below information is tentative and subject to change/clarification.
Who can apply for an SOS grant?
There are a number of restrictions on who can apply for these grants. The SBA has some leeway for how it chooses to interpret this aspect of the bill, so stay tuned for further guidance. But be prepared: if they choose to narrowly interpret the below restrictions, it’s possible that only fully professional choirs (i.e. those that pay all of their singers) will be eligible for an SOS grant.
According to the bill, you’re eligible for an SOS grant if:
- You have not received a (first or second draw) PPP loan since December 27, 2020. Prior (first draw) PPP loans are okay.
- You experienced a drop in revenue of 25% or more in at least one quarter in 2020 compared with the same quarter in 2019.
- Your artists are paid fairly and do not play for free/tips except for fundraisers or similar charitable events.
- You cannot have received more than 10% of gross revenue in 2019 from federal funding.
- Your performances must be marketed online (e.g. on your website or social media).
- There must be paid tickets or cover charges to attend most of your performances. If there are free events, those events are produced and managed primarily by paid employees, not by volunteers.
- On average, you start selling tickets to the public at least 60 days in advance of performances.
- At least 70% of your earned revenue comes from ticket sales and other event-related sales (e.g. production fees, food, beverages, merchandise, etc.).
- The venues at which you perform have a defined performance and audience space, and also have mixing equipment, a public address system, and a lighting rig.
- You engage at least one person to do at least two of the following: a sound engineer, a booker, a promoter, a stage manager, security personnel, and a box office manager.
How much money are we eligible to receive?
You’re eligible to receive up to 45% of your gross earned revenue in 2019. If any money remains in the program’s budget on April 1, 2021, the SBA can issue second grants to organizations that lost 70% or more of their revenue in the most recent quarter compared to the same quarter in 2019. These “supplemental” grants can be up to 50% of the initial grant.
How do we apply?
This program is going to be run directly by the SBA, so you will likely submit an application through their website. Stay tuned for further guidance.
When can we apply?
The SBA has not yet announced the launch of this program, so stay tuned for further guidance. However, be aware that this program will launch in three stages, with prioritization based on the impact of the pandemic on revenue:
- Once the program is live, the first two weeks will be the most limited, with applications only accepted from folks who lost 90% or more of total revenue from April-December of 2020 compared with those same nine months in 2019 (ignoring revenue from PPP loan forgiveness, EIDL Emergency Grants, or other federal pandemic relief programs).
- The following 2 weeks will then allow for applications from folks who lost 70% or more of total revenue during that time frame.
- All other eligible organizations can apply after that. No more than $12 billion can be awarded in the first four weeks, which means at least $3 billion will still be available for folks in this final bucket.
Are there restrictions on how we can spend the money?
SOS grants can cover expenses from March 2020-December 2021 (“supplemental” grants can cover expenses through June 2022). Funds can be used for the following categories of expenses (for long-term obligations, like mortgages, debts, and rental leases, those obligations must have been in place prior to February 15, 2020):
- Payroll costs
- Payments made to independent contractors
- Mortgage interest and principle
- Other debt interest and principle
- Worker protection expenditures (including personal protective equipment)
- Maintenance expenses
- Administrative costs (including fees and licensing costs)
- State and local taxes and fees
- Operating leases
- Insurance premiums
- Production costs for performances
Are there any protections for small organizations?
As with PPP loans, the SOS program has earmarked a portion of the program for smaller organizations. At least $2 billion is set aside for organizations with up to 50 full-time equivalent employees. However, this earmark will be released after 60 days, so apply ASAP to maximize your odds of getting SOS funding.
Grant #3: Emergency EIDL Grants
- Grants of $1,000/employee (capped at $10,000).
- Application can be found here and shouldn’t take more than ~30 minutes.
The Emergency Grant program was intended to be an immediate infusion of cash for organizations in need at the start of the pandemic. See our April blog for more information about the program. The program ran out of funds quickly back in the spring, but the new bill added an additional $20 billion in funding for the program.
If your organization has W-2 employees and you did not apply (or did not apply in time), stop what you’re doing right now and go fill out the application.
Are there any changes to the program since the spring?
Yes. Any funding you receive through an Emergency Grant no longer has to be deducted from your first draw PPP loan forgiveness amount.
Grant #4: Targeted EIDL Advances
- Grants of $10,000.
- Unclear if this will use the same application as for Emergency Grants. Awaiting SBA guidance.
In the new bill, Congress decided to expand the Emergency EIDL Grant program to funnel extra funding to hard-hit organizations in low-income communities. The bill authorizes an additional $20 billion for a special subset of grants called Targeted EIDL Advances (separate from the $20 billion added to the existing Emergency Grant program) that have stricter eligibility requirements than the broader program.
Who can apply for a Targeted EIDL Advance?
To apply for one of these grants, you must:
- Be based in a “low-income community.” This term is used as defined in relation to the New Market Tax Credit. If your community is marked “Severe Distress” or “Eligible” on this map, you should meet this requirement.
- Have experienced economic loss greater than 30% when comparing any eight-week period between March 2, 2020 and December 31, 2020 to a comparable eight-week period from 2019.
- Have no more than 300 employees.
How do we apply for a Targeted EIDL Advance?
Stay tuned for further guidance from the SBA.
What if we already received an Emergency Grant?
If you’ve already received an Emergency Grant, you’re eligible to receive an additional $10,000 minus the value of your Emergency Grant.
How will applications be prioritized?
The new bill states that priority will be given to applicants who already received an Emergency Grant and are looking to “top up” their initial grant. However, it’s unclear what this will mean in practice. Stay tuned for further guidance from the SBA.
That’s all I’ve got for now. Hope you’re able to take advantage of at least one of these programs. Good luck! Post any questions in the comments below. And bookmark this page to check for updates in the coming weeks.
Disclaimer: The details and advice above are based on information from the SBA and Department of the Treasury websites, news sources, and personally reading the text of the Consolidated Appropriations Act. I’m not a lawyer or policy expert, so it’s definitely possible I’ve gotten some things wrong. Please comment below if anything is incorrect or confusing. I’ll keep this post updated with the most current information I have.
Chorus Connection is chorus management software that makes it easy to manage everything in one place. In a world where digital communications are more important than ever, Chorus Connection gives choral leaders the ability to connect with their singers and build their internal choral communities online.
Learn more at www.chorusconnection.com!