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American Rescue Plan Act Elevates PPP and EIDL Support

From McKonly & Asbury, LLP

On Thursday, March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021. While much of the attention on this law has centered on additional direct stimulus payments to individuals, extension of unemployment benefits and other tax credit matters such as increases in the child tax credit, a few key critical elements significantly impact the Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL). A summary of these changes is noted below:

Paycheck Protection Program (PPP) Loans

 The American Rescue Plan Act significantly increases access to PPP loans for 501(c)(3) and (6) organizations. Previously, all 501(c)(3) and (6) organizations with employee counts greater than 500 for 501 (c)(3) or 300 for 501 (c)(6), were impacted by the Small Business Administration’s (SBA) affiliation rules in regard to access to a first round PPP loan. The affiliation rules outlined by the SBA stated:

“Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists. Affiliation under any of the circumstances described below is sufficient to establish affiliation for applicants for the Paycheck Protection Program.”

Control, for purposes of the affiliation rules, focused on 1.) Affiliation based on common ownership; 2.) Affiliation arising under stock options, convertible securities, and agreements to merge; 3.) Affiliation based on management; or 4.) Affiliation based on identity of interest. For a number of 501(c)(3) and (6) organizations, the affiliation rules around common management and identity of interest impacted their ability to apply for PPP loan round one funding. Well, good news! The American Rescue Plan Act now lifts the “affiliation rules” for 501(c)(3) and (6) organizations. More specifically, the legislation allows an organization’s headcount to be considered “per physical location” rather than in-total and across all locations. As such, a 501(c)(3) with more than 500 employees and/or a 501(c)(6) with more than 300 employees – but at multiple locations – are now eligible for PPP.

Also, just announced, the application deadline for PPP loans has been extended from March 31 to May 31. This 60 day extension also provides an additional 30 days for the SBA to finish processing applications received by May 31.

Economic Injury Disaster Loans (EIDL)

On March 12, 2021, the SBA announced that borrowers have until 2022 to meet their obligations under the EIDL program. The SBA announced that the first due date for repayment of EIDL’s made in 2020 will be extended from 12 months to 24 months from the date of the note. For loans made in 2021, the first payment due date is extended from 12 months to 18 months from the date of the note. Borrowers will resume their regular payment schedule with the payment immediately preceding March 31, 2022, unless the borrower voluntarily continues to make payments while on deferment. It is important to note that interest will continue to accrue on the outstanding balance of the loan throughout the duration of the deferment.

Other Key Changes to Business Credit Programs

  • Employee Retention Credit (ERC) is extended to December 31, 2021. Previously, the ERC ended on June 30, 2021. The American Rescue Plan Act now allows for an additional 6 months of the ERC on qualifying payroll costs at a credit percentage of 70% on qualified payroll capped at $10,000 per employee per quarter. Gross revenue reduction and/or partial or full shutdown requirements must be met to qualify for the ERC.
  • Paid Leave Credit is extended to September 20, 2021, and increases the credit to $12,000 (up from $10,000) per employee.

We are here to assist businesses and non-profits with all questions related to PPP, EIDL and ERC. If at any time you need assistance, please visit our COVID-19 Resource Center to access these specific support pages.

If you have any questions regarding this article, or how our team can help, contact David B. Blain, CPA, CVA, Partner and Director of Entrepreneurial Services for McKonly & Asbury and leader of the firm’s PPP Consulting Services at

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