Written by: Brad Steele, J.D.
With the passage of the American Rescue Plan (ARP), Congress has changed some programs that have been extremely important to clubs. The good news is these changes will provide additional support for club leaders. The bad news is most 501(c)(7) private clubs are still unlikely to be eligible for the PPP.
1. Paycheck Protection Program (PPP)
- The ARP does allow all 501(c) businesses to apply for a PPP loan, but it also specifically states that the Small Business Administration’s (SBA) regulation under 13 CFR 120.110 applies.
- That regulation makes certain types of business ineligible for any SBA loans – including the PPP.
- 13 CFR 120.110(i) names private clubs that limit memberships for reasons other than capacity.
- Since most clubs limit memberships for a number of reasons other than capacity, it seems Congress meant to keep private clubs excluded from the PPP.
2. Employee Retention Credit
This has been extended through the last two quarters of the year. New IRS guidance states that if you qualify for the ERC based on a full/partial government shutdown order:
- The order must have had more than a “nominal effect” on operations (at least a 10 percent reduction in services), and
- The order must impact more than a “nominal part” of the club (if it earns at least 10 percent of gross receipts or has 10 percent of employee hours, then it is more than a nominal part of the club).
The new IRS guidance states that the day the government shutdown order is lifted is the day the credit stops – unless you can qualify under the reduced gross receipts option.
3. Paid Sick Leave/Paid Family and Medical Leave
This has been extended through the second and third quarters of the year.
- The 80 hours for Paid Sick Leave, and the 12 weeks for Paid Family and Medical Leave reset on April 1, 2021.
- Employees now qualify for Paid Family and Medical Leave under the same reasons as Paid Sick Leave, with two new reasons added for both:
- Employee is seeking a test/awaiting test results when they have been exposed, or the club requests it.
- Employee is getting or recovering from the vaccine.
- If the club offers Paid Family and Medical Leave, it must now pay for the first two weeks.
4. Economic Injury Disaster Loan
The SBA program receives an infusion of $15 billion for payroll grants.
Brad Steele, J.D. has 15 years of experience in the private club industry and is founder of Private Club Consultants (PCC), which provides in-depth legal and operational answers for private clubs in America.