Since December 2020, Congress has passed two massive pandemic relief bills that, combined, totaled roughly $3 trillion, including numerous funding opportunities for which your chorus may be eligible.
Note: This blog is only relevant for organizations based in the U.S.
Last Updated: March 19, 2021 @ 4:30 PM Eastern Time. Search this page for the word "UPDATE" to see what's new.
What's Happening Right Now?
UPDATE: If you're reading this prior to April 1, 2021, there is urgent and timely information you need to know:
- As of March 11, with the passage of the American Rescue Plan Act of 2021, it is now possible for a single organization to apply for a PPP loan, a Save Our Stages grant, *and* the Employee Retention Tax Credit.
- Any new PPP loan amounts (received after Dec 27, 2020) will be deducted from SOS grant amounts. So you can't get the full value of both grants. But since SOS grant applications still aren't open, it's safe to apply for a PPP loan right away, especially if you need immediate cash or aren't sure whether you'll end up qualifying for an SOS grant.
- See grants 1, 3, and 5 below for more information. Grants 1 and 5 are especially time-sensitive, so move fast!
If you have questions, please share them in the comments below. As the government provides more specific guidance on each of the below programs, we’ll update this blog and respond to your comments to make sure you have the most accurate information available.
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 can apply for a second PPP loan.
- These are forgivable loans up to 2.5 times your average monthly payroll expenses (capped at $2 million).
- The SBA is now accepting applications via all eligible financial institutions. Check with your bank for more information.
- UPDATE: The deadline for applications is March 31, 2021. Don't wait!
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 bills added over $280 billion to the program, and — drumroll, please! — allow 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 our 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?
UPDATE: Prior to mid-March 2021, you were barred from applying for both a PPP loan and an SOS grant. That restriction was eliminated as part of the March 2021 relief bill, but any new PPP loans you receive (after December 27, 2020) will be deducted from your SOS grant amount. In other words, you can't get the full value of both grants. But since SOS grant applications still aren't open, it's safe to apply for a PPP loan right away, especially if you need immediate cash or aren't sure whether you'll qualify for an SOS grant.
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 2020 and you don’t need to be an existing customer to apply through them.
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.
- 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. Update: The new round of PPP funding is only available through March 31, 2021, so that's more likely to be the limiting factor.
Grant #2: Save Our Stages (SOS) Grants
- Grants up to 45% of 2019 gross earned income (capped at $10 million).
- UPDATE: The SBA has finally announced the program will go live on April 8.
- UPDATE: For more info, check out the SBA's info session on March 30 @ 2:30PM (EDT).
The December 2020 stimulus bill included a section titled Grants For Shuttered Venue Operators (SVO), 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."
UPDATE: Although the program isn't open yet, the SBA has issued guidance on the SVO/SOS program that includes good news for choruses of all types, including those with all volunteer singers. See below for more information.
Who can apply for an SOS grant?
According to the bill, you're eligible for an SOS grant if:
- 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.
Our chorus is made up of volunteer singers. According to the requirements above, performers must be "paid fairly and do not play for free/tips except for fundraisers or similar charitable events." Does this mean we're ineligible?
UPDATE: Good news! You're (probably) still eligible! The SBA's latest FAQs page includes the following question: "Would nonprofit organizations that host performances which include volunteer choruses and/or student performers be able to meet this requirement?" The answer: "Yes. Provided the events ... are produced and managed primarily by paid employees, the use of volunteers in the production casts would not disqualify it." You'll have to determine for yourself exactly how this applies to your organization.
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.
Membership dues from a singer can be included in earned revenue based on the estimated value of the goods and services provided to that singer. Any portion of membership dues beyond that value should be treated as a contribution and considered unearned revenue.
How do we apply?
The program hasn't launched yet. Check out the SBA's FAQs (see the heading "Application") for steps you can take right away to prepare for when applications go live.
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
- Ticket refunds for cancelled 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
UPDATE: The SBA is no longer accepting applications for this program.
Grant #4: Targeted EIDL Advances
- Grants of $10,000.
- Organizations will only be eligible if they received $1,000-$9,000 in an Emergency EIDL Grant in the spring, or those who applied and were rejected because the program ran out of funds.
- The SBA will reach out to you if you qualify based on the information in your prior Emergency Grant application.
- The SBA has shared some FAQs related to this program here.
In the December 2020 relief bill, Congress decided to expand the Emergency EIDL Grant program to funnel extra funding to hard-hit organizations in low-income communities. The bill authorized an additional $20 billion for these grants, called Targeted EIDL Advances. Have additional questions not answered below? Check out the SBA's FAQs here.
Who qualifies for a Targeted EIDL Advance?
To qualify 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.
- Have applied for an Emergency EIDL Grant in the spring of 2020 and either received $1,000-$9,000 or been rejected because the program ran out of funds.
How do we apply for a Targeted EIDL Advance?
You don't need to do anything to apply. Only organizations who have already applied for Emergency Grants in the spring are eligible, so the SBA already has info on file for all potentially eligible organizations. They'll reach out to you with next steps if you meet the basic requirements.
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.
UPDATE: Grant #5: Employee Retention Tax Credit (ERTC)
- A refundable tax credit of up to $7,000 per employee per quarter.
- You can qualify every quarter in 2021 in which you meet one of two possible eligibility criteria.
A much more limited version of the ERTC was first introduced by the CARES Act back in April 2020 as a way to support organizations who kept employees on payroll during the pandemic. The tax credit was then expanded by both the December 2020 and March 2021 relief bills.
What's the eligibility criteria for the tax credit?
You're eligible for each quarter in 2021 during which you meet at least one of the following criteria:
- The operations of your organization have been partially or fully suspended that quarter as the result of a government order related to COVID-19.
- Either the quarter in question or the immediately preceding quarter saw a decline of at least 20% in gross receipts compared to the same quarter in 2019. For example, if you're trying to determine whether you're eligible in Q2 2021 for the credit, either Q2 2021 would have had to see such a decline compared with Q2 2019, or that would have to be true for Q1 2021 compared with Q1 2019. For non-profits, calculate "gross receipts" in the same manner you calculate revenue for your annual returns.
How is the tax credit calculated?
For each eligible quarter, calculate the wages for each employee, with a cap of $10,000 per employee. Add that all up and multiply by 70%. In other words, you're eligible for up to $7,000 per employee per eligible quarter.
How do I claim the tax credit?
If you use a payroll provider, talk to them about how to take advantage of the credit.
If you process your own payroll, it's a bit complicated, but the IRS has provided an FAQ to help you navigate your options.
Regardless of which of the above scenarios applies to you, the credit you receive each quarter will be applied to federal employment taxes, and may actually be significantly more than the federal employment taxes you normally pay each quarter. As such, you might not realize the full benefit of the credit you've accrued in a given quarter until well after the quarter ends. If you don't want to wait and would prefer to get the full value of the credit right away, you can fill out Form 7200 to get an advance payment from the IRS.
Any restrictions I should know about?
Thanks to expansions of the ERTC in December 2020, you can now both apply for a PPP loan and also take advantage of the ERTC (that wasn't true in the original CARES Act). However, you can't use the same wages to qualify for both the ERTC and PPP loan forgiveness. Say you have an employee whose wages totaled $15,000 in Q1 2021, you qualified for the ERTC that quarter, and you also received a PPP second draw loan in February 2021. You can apply $10,000 of the employee's Q1 wages to the ERTC and the remaining $5,000 to PPP loan forgiveness. Alternatively, you could elect to apply a smaller amount to the ERTC and the remainder to PPP loan forgiveness if you've determined that will have a more desirable financial outcome. Make sure you run the numbers before you claim the credit or apply for a PPP loan to ensure you're able to maximize both of these benefits without inadvertently shooting yourself in the foot.
Also, you can claim the credit retroactively for all wages already paid in the current quarter, however, you cannot claim the credit retroactive for past quarters. So, if you're reading this in March 2021, make sure you prepare ASAP to take advantage of the Q1 credit if you qualify.
Note: One reader just shared with me that you might actually be able to apply retroactively for past quarters going back to Q2 2020. I haven't verified this independently yet, but worth investigating. Be aware that the tax credit had different rules and was less generous in 2020, but could still amount to thousands in additional funding for your organization.
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 various bills. 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.
Jacob is the founder of Chorus Connection and a proud member of the NYC Gay Men’s Chorus. A lifelong choir nerd and tech geek, he loves marrying his passions to help community choruses run more efficiently. Drop him a line at firstname.lastname@example.org!