CARES Act: Feds Clarify Tribal Gaming Access to Relief Programs
REDW LLC | April 24, 2020
The Small Business Administration (SBA), in response to feedback received from tribal leaders on the CARES Act, has changed its initial position on the eligibility of tribal gaming enterprises for the Paycheck Protection Program (PPP). On April 24, the SBA issued an interim final ruling allowing legal gaming businesses, including tribal casinos, to apply for PPP loans.
The timing could not be better. The most recent rescue bill, authorizing new funding for the PPP, was signed into law on April 24. Tribal gaming enterprises interested in applying for the program should not wait. Previous funding for PPP was exhausted just 12 days after the application process started, and the SBA closed the application process to new claims, leaving many frustrated applicants behind. REDW is advising clients to approach their banks and be ready with their application and certification, so they can be first in line for round #2. The SBA is expected to begin taking applications on Monday, April 27 starting at 10:30AM (EDT).
In reviewing the Employee Retention Credit with tribal leaders, the IRS specifically stated that casinos were not excluded, thereby offering a new avenue of economic relief for tribes during the pandemic. Some of the discussion focused on what a “trade” or “business” means, how that applied to some tribal government entities, and whether entities need separate Employer Identification Numbers (EIN) to qualify. The IRS and SBA indicated that these issues needed to be resolved separately. However, this program is an option for businesses locked out of PPP.
REDW will continue to monitor new pronouncements from the U.S. Treasury Department, (which oversees both the IRS and SBA,) and share and interpret new guidelines as they become available. In the meantime, tribal governments are in the process of receiving funding from the $8B Treasury fund reserved for tribes, which they can also use to reimburse some of their enterprises’ expenditures. Gaming executives should remain in close contact with their tribal governments for news on when this funding becomes available.
Contact Principal Anthony Gerlach, who leads our Tribal Gaming practice, and Principal James Ortiz, who heads our State and Local Tax (SALT) practice, or your REDW relationship manager to learn more about the PPP, Employee Retention Credit and other forms of relief available to tribes.
REDW is committed to keeping you informed at all times, but especially during a crisis of the magnitude of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC. Or check out some of our other updates here.