Alert

By Jenny Y. Liu, Cecilia C. Wang, Alexander B. Ginsberg

The American Rescue Plan Act, signed into law on March 11, 2021 and summarized here, includes a brief but important section that will permit the recipients of Paycheck Protection Program (PPP) loans issued after December 27, 2020 to remain eligible for grants under the “Grants for Shuttered Venue Operators” (Grants) program, which the Small Business Administration (SBA) has yet to launch.

As we discussed here, Section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-profits and Venues Act (Economic Aid Act), passed on December 27, 2020, appropriated $15 billion to provide relief for live venue operators and promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators and talent representatives that have been significantly impacted by the COVID-19 pandemic.

Compatibility with the Paycheck Protection Program. The Economic Aid Act, however, specifically prohibited any entity that applied for a PPP loan after December 27, 2020, regardless of whether the entity actually accepts or receives a loan, from qualifying for a Grant.

With the current PPP set to close by March 31, 2021 and Grant applications still not available at the time of this alert, venue operators and other potential Grant recipients have faced a significant dilemma: should they await the opening of the Grant program, and the possibility of a larger influx of funds, or settle for the relative certainty of a new PPP loan.

In the American Rescue Plan Act, Congress appears to have resolved this dilemma. Under the Act, if an eligible entity accepts a new PPP loan, any amount subsequently received under the Grant program simply will be reduced by the amount of any PPP loan received on or after December 27, 2020.

Additional Funds. In addition, the American Rescue Plan Act adds an additional $1.25 billion to the total amount of Grants available and designates a further $500,000 to be used for technical assistance to help applicants access the System for Award Management or any alternative grant application system. In addition, the SBA will receive $840 million for administrative expenses related to the Grants, the new Restaurant Revitalization Fund (described here), the PPP and targeted Economic Injury Disaster Loans (EIDL) Advances.

Additional Guidance

We are proactively monitoring any forthcoming regulations and guidance in response to the new legislation, including additional guidance governing loan forgiveness. This alert and any accompanying materials are not legal advice, are not a complete summary of the subject matter, and are subject to the terms of use found at: https://www.pillsburylaw.com/en/terms-of-use.html.

These and any accompanying materials are not legal advice, are not a complete summary of the subject matter, and are subject to the terms of use found at: https://www.pillsburylaw.com/en/terms-of-use.html. We recommend that you obtain separate legal advice.