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SBA Releases New Paycheck Protection Program Guidance for 501(c)(6) Organizations

March 17, 2021

On March 12, the U.S. Small Business Administration released new guidance that clarifies the Lobbying Disclosure Act definition of “lobbying” expenses and will be used to calculate the 15% thresholds for 501(c)(6) organizations receiving Paycheck Protection Program loans. Since December, ABC has advocated for the SBA to use the LDA in calculating lobbying activity and has continued to push the administration to release clear guidance on this critical issue for ABC and its chapters.

The LDA definition should be better for most ABC chapters than the IRS definition, since the LDA definition is narrower.

The new law, passed in December, made 501(c)(6) organizations eligible to apply for PPP loans as long as they are not engaged in “significant lobbying activities,” meaning:

1. No more than 15% of revenues are received from lobbying activities;
2. No more than 15% of total activities comprise lobbying activities; and
3. Lobbying activity costs did not exceed $1 million during the most recent tax year ended prior to Feb. 15, 2020.

The LDA definition now adopted by SBA does not require chapters to report state lobbying and grassroots lobbying expenses, which would have been a concern if SBA had adopted the IRS definition of lobbying. More than $100 billion remains in the PPP, which expires at the end of the month. The guidance states that eligible nonprofit organizations that wish to apply for remaining PPP funds should submit their applications no later than March 31, 2021. However, on March 16, the U.S. House passed legislation, H.R. 1799, the PPP Extension Act, to extend the PPP application period from the current March 31 deadline through May 2021 by a vote of 415-3. Senate Majority Leader Schumer has expressed his hope for quick action in the Senate to get this bill to the president’s desk for his signature. ABC will inform members about this action in Newsline.

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