For those nonprofit organizations that participated in the CARES Act-sponsored Paycheck Protection Program which was passed in March 2020, and for those who will be taking advantage of the second version that was signed into law in December 2020 (Paycheck Protection Program Second Draw- or – PPP2), there are some critical protocol items that must be carefully considered and addressed in a timely manner.

When completing the newly released PPP Loan Necessity Questionnaire (SBA Form 3510), we suggest that nonprofit leaders:

  • Begin the process by reading the instructions on the applicable forms before attempting to fill in the responses. 
  • Anticipate spending considerable time making sure each question is answered thoughtfully and with as much detail as possible.
  • Consult with the nonprofit’s outside advisors, including CPAs and attorneys, who can help justify and confirm that the nonprofit meets the SBA’s requirements.
  • Complete the questionnaire within 10 days of receipt of the form from the lender.

On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021, (the “Relief Act”), which included $900 billion in aid available through March 31, 2021 for nonprofit organizations (as well as small businesses and individuals) impacted by COVID-19 with several objectives in mind. 

The goals for this second round of PPP funding were to simplify the forgiveness process as well as to expand eligible costs included in that process.  PPP2 also provides the opportunity to original PPP loan borrowers to re-apply for additional funding of up to $2 million, under certain conditions.

In order to take advantage of the funds from the original PPP or PPP2, the nonprofit community must continue to follow the specific guidelines.  In addition, organizations designated under 501(c)(6) must adhere to additional rules.

They must ensure that:

  • They have 300 or fewer employees
  • They do not receive more than 15% of receipts from lobbying
  • Their lobbying activities do not comprise more than 15% of total activities
  • The cost of their lobbying activities does not exceed $1,000,000