Posted: January 25 at 10:45 AM
On Dec. 27, 2020, then-President Trump signed into law the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”). The Economic Aid Act modifies the Paycheck Protection Program (PPP) established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted in 2020 and allocates an additional $284 billion to fund new and “second draw” PPP loans through March 31. The Economic Aid Act applies to PPP loans made prior to Dec. 27, 2020, as well as to PPP loans made after that date. It authorizes businesses to seek “First Draw” PPP loans if they did not obtain loans under the CARES Act and “second draw” PPP loans if they did.
Critically, the Economic Aid Act’s provisions apply to any PPP loan that was not forgiven prior to Dec. 27, 2020. (Economic Aid Act § 304(c).) This means that the Economic Aid Act will govern: (1) any PPP loans (whether First or Second Draw) made on or after Dec. 27, 2020; and (2) any PPP loans made prior to Dec. 27, 2020, unless the borrower received forgiveness prior to Dec. 27, 2020. In other words, even if a business took a PPP loan prior to Dec. 27, 2020, the Economic Aid Act still may govern the loan’s terms. Accordingly, we address the amendments and their impact on each type of loan below. Lenders and borrowers should move quickly to submit applications, in any event: The Small Business Administration (SBA) opened the application portal for lenders with $1 billion or less in assets for First and Second-Draw PPP loans on January 15 and it opened the portal to all other lenders on January 19.
I. First Draw PPP Loans received and forgiven prior to Dec. 27, 2020, continue to be governed by the CARES Act.
The CARES Act continues to govern PPP loans received and forgiven prior to Dec. 27, 2020. (Economic Aid Act § 304(c).) Accordingly, borrowers who took a PPP loan in 2020 and received forgiveness under the terms of the CARES Act do not need to comply with the Economic Aid Act with respect to such loans.
II. First Draw PPP Loans received before or after Dec. 27, 2020, but not forgiven prior to that date, as well as Second Draw PPP Loans, are governed by the Economic Aid Act.
The Economic Aid Act governs PPP loans received but not forgiven prior to Dec. 27, 2020, as well as PPP loans received after Dec. 27, 2020, including First and Second Draw loans. The same rules govern PPP loans received prior to Dec. 27, 2020, as to First Draw PPP loans received after that date. Second Draw loans are subject to different rules. We consider each in turn.
A. First Draw PPP Loans governed by the Economic Aid Act
The SBA’s Interim Final Rule 1 clarifies the Economic Aid Act “applies to loan forgiveness applications submitted under the Paycheck Protection Program before enactment of the Economic Aid Act where SBA has not remitted the forgiveness payment” as well as to pending applications to increase the amount loaned under a First Draw PPP loan made prior to Dec. 27, 2020. By its terms, the Economic Aid Act also applies to any First Draw PPP loan made on or after Dec. 27, 2020. (Economic Aid Act §§ 304, 310.) 
The eligibility requirements, including the 500-employee limit on borrower size, and many of the loan terms for a PPP loan made prior to enactment of the Economic Aid Act generally remain the same as under the CARES Act. You can read more about those requirements and terms here. The Economic Aid Act, however, made some notable changes affecting First Draw PPP loans:
B. Second Draw PPP Loans
The Economic Aid Act creates a new group of PPP loans for certain businesses that already have received and either have or will fully exhaust a First Draw PPP loan. These new loans are called “Second Draw” PPP Loans. (Economic Aid Act § 311; Interim Final Rule 2.) The eligibility requirements and loan and forgiveness terms are discussed below.
C. Shuttered Venue Grants
The Economic Aid Act also creates grants for live venue operators or promoters, theatrical producers, live performing arts organization operators, relevant museum operators, motion picture theatre operators and talent representatives (hereinafter “Venue”) to apply for a “Shuttered Venue” grant if they meet certain requirements. (Economic Aid Act § 324; see § 324(a)(3)-(10 for descriptions of what businesses qualify as venues.)
Specifically, the grantee: (a) must have been operation on Feb. 29, 2020, as a venue; (b) must show 25% gross revenue decline in any quarter of 2020 compared to the same quarter in 2019; and (c) must affirm that, at the time of the grant application, it is operating or intending to commence venue operations in the future.
More specific requirements exist depending on the type of venue, and the act expressly excludes venues that present live performances “of a prurient sexual nature” or derive more than de minimus gross revenue from “presentation of any depictions or displays of a prurient sexual nature.”
Initial grant amounts are capped at $10 million and depend on whether the venue was in business on Jan. 1, 2019. If the Venue was in operation on Jan. 1, 2019, the initial grant amount will be the lesser of $10 million or 45% of the gross earned revenue in 2019. If the venue came into operation after Jan. 1, 2019, the amount will be the lesser of $10 million or the average monthly gross earned revenue for each month the venue was in operation in 2019 multiplied by six. Supplemental grants are available for venues showing that, as of April 1, 2021, the revenues of the venue for the most recent quarter are not more than 30% of the revenues for the same quarter in the year prior.
The grants may only be used for specific expenses similar to those permitted for PPP loans, and grantee Venues will be subject to increased oversight in the form of audits of employment and other records pertinent to any grant(s).
The Economic Aid Act seeks to reach sectors of the economy that hindsight has revealed were impacted directly by the COVID-19 pandemic. It also seeks to make the application and forgiveness processes easier for lenders and borrowers. The SBA, IRS, and U.S. Treasury Department continue to issue guidance on this expansive act; and, the SBA has indicated applications for newly allocated funds will be posted soon. Staying proactive and keeping apprised the government’s guidance will be critical to seeking and obtaining funds under these programs.
 Interim Final Rule on Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act, Small Bus. Admin. (Jan. 6, 2021) (to be codified at 13 C.F.R. Parts 113, 120 & 121) (referred to hereinafter as “Interim Final Rule 1”).
 Although it is clear this means first-time borrowers (who never applied for PPP relief prior to December 27, 2020) are governed by the same rules as borrowers who sought and obtained PPP loans prior to December 27, 2020, it is unclear whether borrowers who sought and were denied PPP relief prior to December 27, 2020 are covered. Until the SBA clarifies this point, it is advisable to consult your lender to see if your eligibility has changed as a result of the Economic Aid Act or due to other circumstances.
 Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns, Small Bus. Admin. (Jan. 6, 2021), https://www.sba.gov/sites/default/files/2021-01/Guidance%20on%20Accessing%20Capital% 20for%20Underserved-508.pdf.
 Interim Final Rule on Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans, Small Bus. Admin. (Jan. 6, 2021) (to be codified at 13 C.F.R. Parts 120 & 121) (referred to hereinafter as “Interim Final Rule 2”)
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