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SBA Releases New Guidance on PPP Loans for 501(c)6 Organizations

The new guidance on Paycheck Protection Program loans includes information in the form of an FAQ document for 501(c)6 organizations participating in lobbying activities.
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sba releases new guidance on ppp loans for 501(c)6 organizations
Late last week, the U.S. Small Business Administration (SBA) released guidance on Paycheck Protection Program (PPP) loans in the form of an FAQ document. Among the FAQs was information important to Big “I" state associations regarding the eligibility of 501(c)6 organizations that participate in lobbying activities.

When the last round of PPP funding was signed into law in December, 501(c)6 organizations became eligible as long as they met certain requirements. To be eligible, the organization cannot receive more than 15% of receipts from lobbying, the lobbying activities cannot comprise more than 15% of activities and the cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to February 15, 2020. As soon as this became law, the Big “I" urged the SBA to provide guidance on this issue so that a greater number of 501(c)6 organizations that need this aid could have access to it. 

The FAQ document makes clear that lobbying activities will be defined by Section 3 of the Lobbying Disclosure Act. Here is the exact guidance from the SBA.

Question 57: When determining the eligibility of section 501(c)(6) organizations and destination marketing organizations for First Draw PPP Loans and Second Draw PPP Loans, how is “lobbying activities" defined?

Answer: For purposes of determining the eligibility of section 501(c)(6) organizations and destination marketing organizations for First Draw and Second Draw PPP Loans, “lobbying activities" is defined in section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602).

Question 58: May First Draw PPP Loan or Second Draw PPP Loan proceeds be used for lobbying activities or expenditures?

Answer: No. None of the proceeds of a First Draw PPP Loan or Second Draw PPP Loan may be used for (1) lobbying activities, as defined in section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602); (2) lobbying expenditures related to a State or local election; or (3) expenditures designed to influence the enactment of legislation, appropriations, regulation, administrative action, or Executive order proposed or pending before Congress or any State government, State legislature, or local legislature or legislative body.

As the SBA continues to provide more guidance on PPP loans, we will continue to provide members with updates in the weekly News & Views e-newsletter.

Wyatt Stewart is Big “I" assistant vice president of federal government affairs.