Paycheck Protection Program Available to Unions

May 1, 2021

Jay Blumenthal  -  AFM International Secretary-Treasurer

While unions are organizations that strive to improve the lives of their members and protect workers’ rights in the workplace from unscrupulous employers, unions are also employers themselves. The Federation and its locals (particularly larger ones) retain many employees in order to handle the workload of the union.

As many small businesses were forced to shut down during the early days of the pandemic, they were compelled to reduce their normal payroll as staffing needs changed. To help stem the layoffs, the government created an incentive program designed to keep employees on the payroll. This program, called the Paycheck Protection Program (PPP), allowed businesses to apply for Small Business Administration (SBA) PPP loans. If the loans were used as specified (keeping the workforce on the payroll), the borrowers were eligible for PPP loan forgiveness.

Unfortunately, this supportive program, which helps keep employees on the payroll, excluded 501(c)(5) organizations (unions). It seemed so unfair to exclude unions from this program as unions were busier than ever during the pandemic, providing guidance and assistance to members and local officers.

I can’t begin to tell you the number of times I brought this inequitable treatment of unions up when attending meetings of the AFL-CIO Department for Professional Employees (DPE). DPE always included this proposal when submitting our needs to our political friends on Capitol Hill, but it didn’t seem to get the traction it deserved. After a while, I felt like the proverbial “broken record.” With the change of administration in Washington and the balance of power shifting in Congress, the inequity has been addressed. Now 501(c)(5) organizations are eligible to apply for a PPP loan.

As soon as we received word of 501(c)(5) organization eligibility for PPP, we informed all AFM local officers in the US by way of an email blast. (The Canadian government was already providing this type of support to Canadian unions.) AFM International Representatives also reached out to US local officers to make sure they were aware of this change.

Eligibility for 501(c)(5) organizations came none too soon. While our AFM 2020 audit continues, it is clear we have experienced a significant deficit for 2020 and it is expected to continue in 2021. This is a clear departure from prior years when musicians were working and Federation revenue streams were normal. Keeping a watchful eye on expenditures during previous years resulted in surpluses. Revenue streams for both the Federation and our affiliated locals have been severely compromised because musicians have, for the most part, been out of work since the beginning of the pandemic. Assuming our PPP loan application is successful, we will use the loan as prescribed (to cover payroll and other eligible expenses). We anticipate receiving forgiveness on the full loan amount. First draw PPP loans made to eligible borrowers qualify for full loan forgiveness if, during the 8- to 24-week covered period following loan disbursement:

• Employee and compensation levels are maintained

• The loan proceeds are spent on payroll costs and other eligible expenses; and

• At least 60% of the proceeds are spent on payroll costs

SBA is currently offering PPP loans until May 31, 2021. Local officers considering applying for a PPP loan for your local should not wait. High demand on this program may lead to rapid depletion of available funds. Questions about PPP loans should be directed to your AFM International Representative.

---