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CEO DATELINE – GOP bill expands PPP eligibility to 501(c)(6) groups

July 28, 2020
By Walt Williams

A proposed economic stimulus bill crafted by Republicans would allow 501(c)(6) associations, chambers of commerce and other groups to access the Paycheck  Protection Program, as long as lobbying represents a relatively small part of the groups’ work.

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The Health, Economic Assistance, Liability Protection, and Schools Act, or HEALS Act, would dedicate up to $1 trillion to help individuals and businesses weather the COVID-19 pandemic. Among the bill’s many provisions is a second round of funding for PPP, with the legislation authorizing roughly $190 billion in forgivable loans compared to the more  $500 billion given out during the first round, according to a Washington Post analysis.

PPP covers up to eight weeks of payroll costs, including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

Many associations and other 501(c)(6) groups were ineligible for PPP because of Small Business Administration restrictions on which groups can receive the funds . (Some 501(c)(3) association already were eligible.) The HEALS Act removes those restrictions, with caveats.

First, loans can only go to organizations that employ fewer than 300 people. Second, and more importantly for most associations, 501(c)(6) groups are not eligible if they receive more than 10 percent of receipts from lobbying or “lobbying activities do not comprise more than 10 percent of receipts .” At the same time, professional football leagues and organizations with the express purpose of participating in political campaigns and activities are not eligible.

Destination marketing organizations are also eligible under the same restrictions. In addition, the bill forbids any loan money from being used for lobbying activities.
ASAE has been lobbying for months for lawmakers to expand eligibility to 501(c)(6) organizations. In an email, Director of Public Policy Chris Vest said the bill is “an encouraging development from our perspective” although the restrictions on lobbying activity could use more clarity.

“We have to keep in mind that this bill is a marker and we'll have to see how negotiations with the Democrats play out,” Vest said. “But overall, it is encouraging that Senate Republicans are seeking to course correct and address the near-total exclusion of 501(c)(6) associations from COVID-19 relief programs thus far.”

The next step will be for Republicans to negotiate with Democrats in the Senate and House of Representatives. Democrats have been pushing for a $3 trillion relief package that continues expanded unemployment benefits at current levels and provides more aid to state and local governments facing tax revenue shortfalls. Several Democrats have also expressed support for expanding PPP eligibility to 501(c)(6) groups.