Summary of the Federal Funding
We are starting 2021 with optimism and gratitude. After many months without an agreement, Congress came together at the end of 2020 and President Trump signed a $2.3 trillion dollar omnibus bill, combining the 2021 federal budget with COVID-19/Pandemic relief. Texas's cultural sector and communities across the nation have much to celebrate, as the relief package includes funding for non-profit and commercial cultural organizations, as well as an extension of unemployment insurance for cultural workers.
January 22, 2021 UPDATE:
On Friday, January 22nd, the Small Business Administration (SBA) updated their website to clarify that Shuttered Venue Operator (SVO) grant applicants will be disqualified from receiving funds if they also apply for the Paycheck Protection Program (PPP).
While the SBA website had previously stated that SVO applicants could not receive PPP and vice versa, applicants will no longer be allowed to apply for both. Therefore, a PPP borrower cannot repay or reject a loan from after December 27, 2020 to attempt for eligibility for an SVO grant. The act of applying for PPP is what will disqualify one from an SVO grant.
Along with this, the SBA has revised its overview on SVO as of January 21st to clarify that it has no intention of granting funds to organizations who have 50 or fewer employees in the first 60 days of the program.
More information on the SVO grant can be found on the SBA website here.
Similarly, the SBA also released additional guidance surrounding the PPP in the last week.
· Procedural Notice - PPP Borrower Resubmissions of Loan Forgiveness Applications Using Form 3508S, Lender Notice Responsibilities to PPP Borrowers, and Offset of Remittances to Lender for Lender Debts
More resources can be accessed here, through the Americans for the Arts COVID-19 Arts Resources Table, which is updated regularly.
* * * * *
Read below for highlights and further below that DETAILED information about the Relief Package and eligibility requirements. Check it out!
Pandemic Relief Package ($900 billion) Highlights Include:
- Second round of direct IRS stimulus checks at $600/person (phasing out after $75K income for single filers and $150K for joint filers)
- Continues the $300 above-the-line charitable deduction for 2021 and permits a $600 deduction for couples filing jointly in 2021;
- $284 billion for first and second round Paycheck Protection Program forgivable loans, simplifies the forgiveness application process for smaller loans up to $150,000 and extends eligibility to 501c6 organizations, like local chambers of commerce. To provide some context, the PPP program provided over $13 billion in its first round to cultural and creative economy organizations.
- $15 billion to support live entertainment venues & cultural institutions - a new source of relief for eligible entities;
- $20 billion to replenish new Economic Industry Disaster Loans (EIDL) through the Small Business Administration
- Extends the Employee Retention Tax Credit through July 1, 2021
- $7 billion broadband internet access across the country
- $82 billion for education & expansion of Pell Grants; $10 billion for childcare
- Funds for speedy, equitable and free vaccine distribution
Extensions of Unemployment Policies To Support the Cultural Workforce:
- The Pandemic Unemployment Assistance (PUA) program has been extended to April 5 (with a phase-out beginning in mid-March). This includes an extension of the eligibility period to 50 weeks.
- For salaried/hourly workers, the Pandemic Emergency Unemployment Compensation (PEUC) program has also been extended to April 5 once the applicant exhausts their state Unemployment Insurance (UI).
- “Mixed earners” with 1099/W2 income who were ineligible for PUA will receive a weekly bonus of $100 for the duration of their state UI/PEUC benefits.
- And, all recipients of unemployment (state, PUA, PEUC) will receive an extra $300 week from December 26 to March 14.
FY 2021 Appropriations ($1.4 trillion) Highlights Include:
- $167.5 million for both the NEA and NEH (a $5.25 million increase from FY 2020 funding levels) and waiver language that allows FY 2019, FY 2020, and FY 2021 grants to be used for general operating support, as requested by arts advocates;
- $257 million for the Institute of Museum and Library Services
- $475 million for the Corporation for Public Broadcasting
- An increase of $500,000 for the federal Arts In Education grant program, to a level of $30.5 million
What's next? Now that the legislation has been signed, the federal agencies had 10 days for the rule making process. This is when they create program guidelines and reporting requirements. Texans for the Arts will be monitoring this process closely. In addition, with a whole new Administration being installed on January 20th, President-Elect Joe Biden has stated this pandemic relief package is a "down payment," with more to come. Texans for the Arts will fight for every dollar of cultural support as we begin this process all over again for the relief that expires in March.
* * * * * *
DETAILED INFORMATION - ARE YOU ELIGIBLE?
FEDERAL CULTURAL PANDEMIC RELIEF
*This information is current as of December 28, 2020. We will update as new details emerge. Please check back regularly.
Thank you to the following team who drafted this information: Nate McGaha, Executive Director, Arts North Carolina; Crystal Storm-Otterstrom, Executive Director, Utah Arts Alliance Foundation; and Jonathan VanderBrug, Deputy Director-Civic Engagement, Illinois Arts Alliance.
Congress Passes BILLIONS in Arts Relief: More PPP and Unemployment, Grants for Performing Arts Venues and Organizations, Museums and Cinemas
UPDATE: President Trump signed H.R. 133 into law on Sunday, December 27, 2020. An increase of the federal stimulus is under consideration but will require majority support from House and Senate.
On Monday December 21, 2020 both the US Senate and US House of Representatives passed H.R. 133, a massive $2.3 trillion spending bill that included a more than $900 billion pandemic relief package joined with a $1.4 trillion spending bill for FY2021. There is significant relief for cultural organizations and workers contained in the bill including an extension of Federal Pandemic Unemployment programs (with an additional $300 to all weekly benefits), $284 billion for forgivable Paycheck Protection Program (PPP) loans (allowing many apply for a second loan), and $15 billion in relief grants for entities and individuals operating live performance venues, performing arts organizations, museums, independent movie theaters, and talent agencies plus an increase of $5.2 million each in funding for the National Endowment for the Arts and National Endowment for the Humanities ($167.5 million each in FY2021). We are incredibly excited that much of the relief that Inspire Washington has been advocating for is in the bill, along with Americans for the Arts, National Independent Venue Association and others. This represent the single largest amount of funding for arts and culture ever passed by Congress and includes:
“SAVE OUR STAGES” GRANTS- $15 BILLION THROUGH SBA
This program will be administered and funding distributed by the Small Business Administration (SBA). The SBA will interpret this law and define eligibility, priority, and allowable expenses for all grants awarded under this program.
WHO IS ELIGIBLE?
- Eligible persons or entities are for-profit or nonprofit live performance venue operators or promoters, performing arts organizations, museums, talent representatives, theatrical producers, and independent movie theaters operating before February 29, 2020 that can show gross earned revenue in any calendar quarter of 2020 that was 25% less than the same calendar quarter of 2019. On the date the grant is issued, eligible entities must be operating or intending to operate in the future.
- An entity that receives a “Save Our Stages” Grant may NOT receive a second PPP loan. It is unclear if an entity can receive a second PPP loan and then a “Save Our Stages” Grant. Clarification should come with SBA guidance.
- Live performance venues, performing arts organizations and producers must make at least 70% of their earned revenue from tickets or admission charges for live events, concessions or merchandise at those events, and/or nonprofit educational activities. Events must be marketed through print or online media, admission must be charged, staff and performers must be fairly paid, and venues must have a clearly defined audience and performance areas (stage), employ certain positions (one or more persons doing at least two of the following: sound engineer, stage manager, security personnel, box office manager, booker, or promoter) and use certain equipment (mixing equipment, PA system, and lighting rig).
- Museums must operate a nonprofit museum as its principal business with indoor exhibition spaces subject to pandemic restrictions, and have at least one regularly programmed auditorium, lecture hall, etc. with fixed seating.
- Talent Representatives must have 70% of operations be representing professional artists for live performances as described for live performance venues.
- Movies theaters must have at least one screen with a projection booth, a seating area for an audience, market show-time listings by print or electronic means, and charge admission.
- Eligible independent entities cannot be issuer of securities on a national securities exchange, receive more than 10% of gross revenue from the federal government, or offer performances, services, or merchandise of an excessive sexual nature. Eligible businesses may not have more than two of the following three characteristics: have venues in more than one country, or more than ten states, or have had more than 500 FTE employees as of February 29, 2020.
- Calculations: Full Time Equivalent Employees are 30+hr./wk. = 1 FTE and 10-30 hrs./wk. =.5 FTE. CARES Act funding should not be counted toward gross revenue. Accrual accounting should be used to determine revenue. SBA may use alternate methods to determine loss of seasonal employers.
WHAT IS THE PRIORITY OF INITIAL GRANT AWARDS?
- In the first 14 days, to be awarded initial grant funding from the SBA, the entity or individual must have total revenue during the period beginning April 1, 2020 and ending December 31, 2020 that is not more than 10% of the total revenue during the period beginning April 1, 2019 and ending December 31, 2019 due to the COVID-19 pandemic.
- In the second 14 days, to be awarded initial grant funding from the SBA, the entity or individual must have total revenue during the period beginning April 1, 2020 and ending December 31, 2020 that is not more than 30% of the total revenue during the period beginning April 1, 2019 and ending December 31, 2019 due to the COVID-19 pandemic.
- After the first 28 days, other initial grants will be awarded through the Small Business Administration (SBA), which may spend no more than 80% of the total funding during the 28-day priority period. Also, $2 billion will be set aside for entities with fewer than 50 full-time employees. No more than five affiliates of an individual or entity may receive funding.
HOW MUCH ARE THE GRANT AMOUNTS?
- Initial grants will be equal to 45% of gross earned revenue during 2019 or 10 million, whichever is less. Entities that began operations after January 1, 2019 will receive 45% of the average monthly gross earned revenue multiplied by the number of months in operation.
- Additional grants of 50% of the initial grant amount may be awarded if the entity or individual can show as of April 1, 2021 they made 30% or less in total revenue for the most recent calendar quarter than that same period in 2019 due to the COVID-19 pandemic.
- The total of the initial and additional grants awarded may not exceed $10 million.
WHAT ARE THE ALLOWABLE EXPENSES?
- Initial grants must be used for allowable expenses incurred between March 1, 2020 and December 31, 2021.
- Additional grants must be used for allowable expenses incurred before June 30, 2022.
- Allowable expenses include payroll, equipment, rent, insurance, worker protection expenditures, most mortgage payments, and utilities, as well as advertising, travel and capital expenditures for live performances.
- Prohibited expenses include the purchase of real estate of any payment on a mortgage initiated after February 15, 2020. The funds may not be re-loaned or invested, or used to make political contributions.
- Grant use will be reviewed by the SBA to determine fraud, noncompliance, or misspent funds and grant recipients will need to retain 4 years of employment record and 3 years of other records following receipt of the grant.
PAYCHECK PROTECTION PROGRAM (PPP)- $284 BILLION
- Entities with fewer than 300 employees that can show a 30% reduction of revenue from any single quarter of 2019 to the corresponding quarter of 2020 as a result of the pandemic, may receive a second forgivable Paycheck Protection Program (PPP) loan equal to 2.5 times that entity’s average monthly payroll, up to $2 million. Separate calculations are required for those not in operation for all of 2019.
- Forgivable expenses are expanded to include software or cloud computing services for a wide variety of business purposes, property damage caused by riots vandalism or looting in 2020 and not covered by insurance, supplier costs necessary for business, and investments in facility modifications and personal protective equipment to operate safely during the COVID-19 pandemic.
- Gross taxable income does not include first and second PPP loans.
- Loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less. SBA is required within 24 days of passage of this Act, to provide a forgiveness form for these loans less than one page in length, requiring only the number of employees the recipient was able to retain because of the covered loan, the estimated amount of the covered loan amount spent on payroll costs, and the total loan value.
- $25 billion set aside for PPP loans no greater than $250,000 for small businesses with 10 or fewer employees.
FEDERAL UNEMPLOYMENT ASSISTANCE
- Pandemic Unemployment Assistance (PUA) is expanded by 11 weeks (from 39 to 50 possible weeks), extending the deadline to accept new claims until March 14, 2021, and allowing claims to be paid for weeks prior to April 5, 2021. PUA provides federal funding to states for weekly unemployment insurance (UI) benefits to the self-employed and independent contractors (1099 “gig” workers) who are unemployed as a result of the pandemic.
- Federal Pandemic Unemployment Compensation (FPUC) is reinstated for 11 weeks beginning December 26, 2020 through March 14, 2021. During that period FPUC will provide federal funding for a $300 increase to all UI weekly benefits resulting from the pandemic.
- Pandemic Emergency Unemployment Compensation (PEUC) is expanded by 11 weeks (from 13 to 24 possible weeks), extending the deadline to accept new claims until March 14, 2021 and allowing claims to be paid for weeks prior to April 5, 2021. PEUC provides federal funding for weekly UI benefits of claimants who have exhausted their state UI benefits (12 weeks of WA benefits + 24 weeks of PEUC = 36 weeks of UI).
- Mixed Earnings of wages and self-employed earnings shall be accounted for with Federal Pandemic Unemployment Compensation (FPUC) by adding an additional $100 to the weekly $300 FPUC benefit ($400 total) of claimants that earned at least $5,000 in self-employed income in the most recent taxable year, for 11 weeks beginning December 26, 2020 through March 14, 2021.
- Extended Benefits (EB) which provides federal funding for 6 weeks of UI benefits after both state UI benefits and PEUC benefits have been exhausted, will need to be exhausted before a claimant may receive the additional 11 weeks of PEUC added in this Act. Unemployed claimants that have exhausted 12 weeks of state UI, 13 weeks of PEUC and have used only some of the 6 weeks of Extended Benefits will need to exhaust all EB weeks before receiving the additional 11 weeks of PEUC benefits.
- Emergency Unemployment Relief for Non-Profits is extended by 11 weeks until March 14, 2021 and pays 50% of unemployment expenses incurred by nonprofits due to the pandemic.
OTHER ARTS RELIEF FUNDING & POLICY
- CARES Act Coronavirus Relief Funds for State, Local, and Tribal Governments now do not have to be spent until December 31, 2021 (1-year extension)
- Re-establishes the CARES ACT $300 above-the-line charitable tax deduction for 2021 and expands it to include a $600 deduction for taxpayers filing jointly.
- Second round of IRS Direct Stimulus Checks: $600/person (phasing out for incomes over $75K for single filers and $150K for joint filers based on 2019 tax returns), and an additional $600/child for eligible dependents.
- $20 billion for new Economic Injury Disaster Loans (EIDL) Advances through the SBA and establishes that EIDL Advances would not be included in recipient’s taxable gross income
FEDERAL ARTS FUNDING IN THE FY2021 BUDGET
- $167.5 million for both the National Endowment for the Arts and National Endowment for the Humanities, a $5.25 million increase each from FY2020 funding. Also, a waiver that allows FY2021 grants to be used for general operating support and uncompleted FY2019 and FY2020 previously awarded grants to also be used for general operating support.
- $257 million for the Institute of Museum and Library Services (IMLS).
- $475 million for the Corporation for Public Broadcasting (CPB).
- $15 million additional to IMLS for a grant program to support American Latino Museums across the country.
- $30.5 million (increase of $500,000) for the federal Arts In Education grant program.
- Authorization for the Smithsonian Institution to build and support two new museums on or near the National Mall in Washington DC: National Museum of the American Latino and National Museum of Women’s History (formal name TBD)