Texas Arts Advocacy Day 2019, Austin. Photo credit: Matt Stryker

CARES Act

On Friday, March 27th, the US House of Representatives passed, and President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an unprecedented and historic $2 Trillion pandemic relief package with many provisions that will help arts nonprofits who are struggling as well as artists and arts workers who are unemployed as a result of COVID-19. This law will provide forgivable Small Business Administration loans for struggling non-profit arts organizations and independent artists, as well as $75 million of emergency funding available through the National Endowment for the Arts.  A massive expansion of unemployment benefits that would put up to $950 per week into the pockets of many Texans (including self-employed and contract workers such as independent artist) and increases the period that someone can receive benefits from 12 weeks to 25 weeks. 

 

Pandemic Relief for the Arts in Texas from the 
Coronavirus Aid, Relief, and Economic Security Act (CARES Act):

 

The Small Business Administration has resources for businesses, workers, and residents, including information on how to apply for Small Business Administration Disaster Loans and Small Business Emergency Loan Fund, including for nonprofit organizations.

 

Small Business Administration Loans (Paycheck Protection Program)

Eligible entities include: small businesses (under 500 employees), 501(c)3 nonprofits, and “sole-proprietors, independent contractors, and other self-employed individuals” 
• Must have been active with employees on payroll (or paid independent contractors) as of February 15, 2020
• Proof of repayment ability is not required, but must make a good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19 — “limited to companies that have seen their business dry up or stop completely due to COVID-19”

Organizations are eligible for loans equal to 2.5 times the amount of an average monthly payroll, up to $10 million, at 4% interest for any amount of the loan that does not qualify for forgiveness. The related expenses may be incurred between February 15 and June 30, 2020, and maximum maturity of the loan is 10 years.

These loans (either the full principal or part of the principal) can be forgiven under the following conditions: 
• If the loan is used for payroll (including salaried employees, contractors, and earnings from self-employment), paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments;
• If those eligible expenses are paid during the 8-week period after origination of the loan; 
• If the small business does not significantly reduce its workforce during the forgiveness window. “The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation… borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period. “
• Eligible payroll costs do not include compensation above $100,000 in wages.
• Much of the SBA’s usual paperwork will be waived in order to speed loan disbursement. Documentation of covered expenses will only be required after the fact, upon request for loan forgiveness.

PLEASE NOTE: SBA Paycheck Protection Program Loans will be administered through qualified SBA lenders. Texans for the Arts encourages those interested in applying for these loans to contact your bank to see if they are a qualified lender, and to seek further consultation from your bank or a qualified lender. 

Organizations may instead apply for an Economic Injury Disaster Loan (EIDL) of up to $2 million through the Small Business Administration, which can be paid back over 30 years at a rate of 2.75% for nonprofits (3.75% for-profit). Those applying for an EIDL may also apply for up to a $10,000 EIDL Grant that would be issued within three days of the application being received and which would be forgiven if used for certain expenses, even if the initial EIDL application is not approved. However, EIDL does not seem to be the best option for most nonprofits.

 

 

 

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The Texas Workforce Commission has everything you need to know to take advantage of expanded unemployment benefits as a result of the new law, including support for self employed individuals (vital for the arts and culture sector).

 

HOWEVER, because of the extremely high volume of individuals applying for unemployment benefits the Texas Workforce Commission has put into place special contact information to process applications.  Please check their web site here to determine when and how to contact the TWC.

 

Unemployment Insurance Provisions (Relief for Workers Affected by Coronavirus Act)

 

Pandemic Unemployment Assistance
Program through December 31, 2020 to provide payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.

Emergency Increase in Unemployment Compensation Benefits
Provides an additional $600 per week payment to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months.  

Temporary Full Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week
Provides funding to pay the cost of the first week of unemployment benefits through December 31, 2020 for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive benefits.

Pandemic Emergency Unemployment Compensation
Provides an additional 13 weeks of unemployment benefits through December 31, 2020 to help those who remain unemployed after weeks of state unemployment benefits are no longer available. 

Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations
Provides payment to states to reimburse nonprofits, government agencies, and Indian tribes for half of the costs they incur through December 31, 2020 to pay unemployment benefits.

Emergency State Staffing Flexibility
Provides states with temporary, limited flexibility to hire temporary staff, rehire former staff, or take other steps to quickly process unemployment claims.

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(Limited) Universal Charitable Deduction

  • Temporary, above-the-line deduction for total charitable contributions, which would be capped at $300.
    • Incentive applies to contributions made in 2020 and would be claimed on tax forms next year.
    • Will encourage charitable contributions through the economic challenges in the coming months 

Other Arts-Centric Pandemic Relief Funding

  •   $75 million for National Endowment for the Humanities (NEH)
    • $50 million for Institute for Museum and Library Services (IMLS)
    • $25 million for Kennedy Center for the Performing Arts
    • $7.5 million for Smithsonian Institute
    • $75 million for Corporation for Public Broadcasting (PBS)
    • About $5 billion for Community Development Block Grants (CDBG)

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