The gaming industry received a reprieve last week, as small casinos will now be able to apply for the Payroll Protection Program.
On April 28, the federal Small Business Administration reversed course on an earlier decision that blocked any gaming operations from applying for federal aid. The revised guidelines, which were originally approved April 24 and then adjusted four days later, are meant to help speed up the application process, officials said.
“It is critical to meet lenders’ and borrowers’ need for clarity concerning program requirements as rapidly as possible because the last day eligible borrowers can apply for and receive a loan is June 30, 2020,” SBA officials said in the revised document.
COVID-19 Affects Industry
The COVID-19 shutdown hit the gaming industry hard, losing $43.5 billion over the course of April alone. While some larger companies sustained losses, they have online gaming and resort projects to help recover revenue once the quarantine order gets lifted.
Smaller family-owned casinos don’t have the same options They lack the funding to produce gaming apps or to launch big-scale renovations. Smaller operations rely mainly on physical customers coming in to gamble. Until they’re able to open the doors, some of these companies need federal assistance to help make payroll.
CARES Act Payroll Loans
That’s where the CARES Act was supposed to help. The bill set aside $350 billion to provide businesses with loans. The government will forgive those loans if companies used 75% of the proceeds to cover payroll costs.
Congress approved an additional $310 billion in late April after companies rushed to apply for the first $350 billion. The SBA manages that fund and issued temporary guidelines for the loan program earlier in April.
While Congress said gaming companies could apply for help, they never provided details. As a result, the SBA just used its traditional rules to determine who could apply.
Those rules, found in the Code of Federal Regulations, state that companies “deriving more than one-third of gross annual revenue from legal gambling activities” are not eligible for any economic injury disaster loans.
Understandably, that irritated groups like the American Gaming Association, who protested in letters to President Trump and Congress.
“Size Eligible” Gaming Companies Can Apply
“Size Eligible” gaming companies will be allowed to apply for this second round of loans after the government clarified the rules. To the Small Business Administration, size is key.
The SBA only provides loans under the Payroll Protection Program to companies that qualify as a small business. Normally, companies must have 500 or fewer employees to quality. It is possible to be slightly over 500 and fall within an exemption based on the SBA’s ‘size standards’ for different industries.
Eligible companies must also provide payroll and tax records to qualify. This information includes documentation of how many employees are on staff and how much each is paid. If you meet both of those qualifications, then your casino or gaming company will be allowed to apply.
“We are pleased that the rules released today make small gaming companies eligible for this critical CARES Act relief program,” said American Gaming Association CEO Bill Miller. “I’m grateful to President Trump and the administration for recognizing that commercial and tribal gaming industry employees deserve the same support available to other small businesses.”
Under the program, companies can apply for up to 2.5 times their average monthly payroll costs for the last year. If the company uses the loan proceeds to continue paying employees, then it can be forgiven.
How Can I Apply For The Payroll Protection Program?
It’s necessary to follow the strict guidelines on how to apply for the Payroll Protection Program. It’s important to pay attention to the how and where of the application process.
Where To Apply For PP Loans
Now that gaming companies can apply for this program, how and where seem to be the next biggest questions. The where is pretty important.
You’re not filing a request with the federal government. Banks and credit unions approved by the Small Business Administration issue the loans. Congress approved the funding and provided the money to the banks and credit unions. The banks and credit unions decide whether to approve the gaming company for the PPP loan. For a look at what banks are nearby, you can check here.
Gaming companies can apply for funds between April 27 and June 30. But once June 30 comes and goes, that’s it. If you haven’t filed paperwork by that date, your company won’t be considered.
How Do Gaming Companies Apply for PPP Loans
And therein comes the second question. How do I apply?
First, make sure you collect all the needed documents. This includes material to provide your company was operational on February 15. It also includes documentation that shows you had employees and the average monthly payroll costs. Without these items, your application won’t be considered.
To get your application form, you either go to the SBA website or click here. It includes four pages of questions, asking if your business is a franchise and if you can prove to be a resident of the United States.
Fill out the application, find a nearby bank that participates in the program and set up a time for a meeting. That’s all. Just don’t expect a quick answer. Some companies waited for two or three weeks before learning whether the bank approved their loan application.