The Small Business Administration has announced that 501(c)(6) associations can use the lobbying figure they report under the Lobbying Disclosure Act to determine eligibility for Paycheck Protection Program loans.

The decision brings clarity for 501(c)(6) nonprofits, which "already do these calculations of lobbying expenses for mandatory quarterly LDA disclosures, so this should be easy for them to determine if they're under the $1 million limit," Chris Vest, ASAE's vice president, corporate communications & public relations, said in an email to CEO Update on Friday.

The LDA number is often lower—in many cases much lower—than the lobbying figure reported on IRS Form 990. Therefore, more 501(c)(6) groups could be eligible for the PPP loans.

ASAE CEO Susan Robertson commended the SBA Friday for issuing the March 3 clarification.

"ASAE is pleased to see the SBA heed our calls for clear guidance defining lobbying activities under the same parameters as the Lobbying Disclosure Act for those 501(c)(6) organizations determining their eligibility for the Paycheck Protection Program," Robertson said in a statement.

"This necessary step will ensure as many deserving 501(c)(6) entities as possible can access federal relief to get back on their feet after this devastating, year-long pandemic and perform their vital missions in service of the industries and professions that will drive our economic recovery," Robertson continued.

As part of the stimulus bill passed in December, Congress authorized $284.5 billion for PPP lending and made 501(c)(6) groups eligible. But it was unclear how the SBA would interpret eligibility.

The legislation states that lobbying activities cannot comprise more than 15% of total activities, "receipts" from lobbying cannot exceed more than 15% of all receipts, and total lobbying expenses may not exceed $1 million for the tax year that ended by Feb. 15, 2020.

But 501(c)(6) nonprofits disclose lobbying activity in multiple ways, including the LDA and IRS Form 990. The LDA and IRS reporting requirements define lobbying differently.

For example, the LDA does not include "communications with the public or any segment of the public in an attempt to influence their views with respect to legislative matters or elections." But the IRS does classify such activities as lobbying for Form 990 reporting.

ASAE had sent a letter to Congress on Dec. 22 stating: "We believe that, without appropriate guidance on how to measure ‘receipts from lobbying' and ‘lobbying activities,' numerous nonprofit associations will remain locked out of the PPP despite dedicating modest resources to lobby the government."

The SBA still has not addressed "receipts from lobbying." However, it likely means "revenue generated by the nonprofit for the express purpose of financing lobbying activities," Vest said.

Associations have until March 31 to apply through SBA-approved lenders.

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