Small Gaming Businesses Now Eligible for PPP FundsApril 28, 2020 – Alerts
Small gaming businesses were dealt a winning hand by the Small Business Administration (SBA) on April 24, 2020 when it posted revised regulatory guidelines for the Paycheck Protection Program (PPP).
Originally, on April 2, the SBA posted an interim final rule that prevented any business from participating in the PPP if the business derived more than one-third of its gross annual revenue from gaming activities. Then on April 14, the guidelines were revised to allow businesses with less than $1 million in gaming revenue to participate in the PPP if gaming revenue was less than 50 percent of a business’s total revenue.
The SBA’s April 24 revision drops the gaming-specific restrictions and states that, "a business that is otherwise eligible for a PPP Loan is not rendered ineligible due to its receipt of legal gaming revenues.”
Newly eligible gaming businesses can use PPP loans for:
- Costs related to the continuation of group health benefits during periods of paid sick, medical, or family leave, and insurance premiums
- Mortgage interest payments (but not prepayments or principal payments)
- Rent payments
- Utility payments
- Interest payments on any other debt obligations incurred before Feb. 15, 2020
*75 percent of the PPP loan must be used for payroll costs, which the interim final rule states, "is an appropriate percentage in light of the Act’s overarching focus on keeping workers paid and employed.”
The SBA is authorized to make loans through June 30, 2020. However, initial funding for the PPP program has already been claimed and a second round of funding – provided through the Paycheck Protection and Health Care Enhancement Act, which was signed into law on April 24 – is expected to not meet demand. Accordingly, eligible gaming businesses that choose to pursue PPP funds should act quickly.
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