After complaints from industry lobbyists and lawmakers in Congress, the Small Business Administration has revised a controversial rule that blocked small gaming companies from applying for federal loans to make payroll while their companies are closed due to the coronavirus outbreak.
The SBA Tuesday issued revised interim regulatory guidelines that allow small businesses that derive revenue from legal gaming to participate in the Paycheck Protection Program. The policy change was announced about a week after President Donald Trump said he would investigate why smaller casinos can’t get loans.
Earlier this week, U.S. Treasury Secretary Steven Mnuchin told reporters that the SBA would be coming out with some additional guidance.
According to the SBA, a legal gaming company is eligible for a PPP loan if its legal gaming revenue did not exceed $1 million last year, and legal gaming revenue comprised less than 50 percent of the business’ total revenue last year.
“Businesses that received illegal gaming revenue are categorically ineligible,” the SBA said. “The administrator, in consultation with the secretary, believes this test appropriately balances the longstanding policy reasons for limiting lending to businesses primarily and substantially engaged in gaming activity with the policy aim of making the PPP loan available to a broad segment of U.S. businesses and their employees.”
In the SBA’s guidelines, they cite a 1996 federal regulation outlining what businesses cannot apply for a loan from the federal agency.
“Businesses deriving more than one-third of gross annual revenue from legal gambling activities” are among the ineligible, the SBA guidelines say.
That left many gaming companies with fewer than 500 employees unable to apply for PPP funds that were set to receive assistance by the federal government under the Coronavirus Aid, Relief and Economic Security Act (CARES) signed into law earlier this month.
But the original regulation blocking gaming businesses from receiving SBA loans remain in place.
“While these changes represent some progress, they fall woefully short of fully addressing antiquated, discriminatory policies that have, to date, restricted small gaming companies from accessing critical loan support made available through the CARES Act,” Bill Miller, president and CEO of the American Gaming Association (AGA) said in a statement.