Last Friday, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2.2 trillion package that includes a number of programs to provide assistance and relief to our nation’s nonprofits and small businesses. Congress called on the Administration to work quickly to implement these new relief measures so that funding can flow to those hardest hit by the crisis. We have mapped out the key nonprofit support provisions most relevant to our America Forward Coalition members below, including instructions on how organizations can access critical financial assistance.
If you are interested in additional information about how the CARES Act affects nonprofits, please read our recent piece What Nonprofits Should Know About the $2.2 Trillion Federal Covid-19 Aid in the Chronicle of Philanthropy.
Please also REGISTER HERE for a 4/7 webinar that the Chronicle of Philanthropy is hosting – The Stimulus Bill and Nonprofits: Answers to Your Questions – that will feature America Forward Senior Advisor Lee Foley answering questions from the community including: what is included in the new stimulus bill that aids nonprofits and how can nonprofits apply for and manage the new Small Business Administration loans (more detail below)?
SBA Disaster Loans:
The Small Business Administration (SBA) is already financing low-interest federal disaster loans, known as “Economic Injury Disaster Loans (EIDL),” which nonprofits qualifying under SBA size standards can obtain now at 2.75 percent interest for up to 30 years. The SBA website also now includes this LINK if you are interested in applying for an EIDL. We have been advised that most nonprofits with 500 employees or fewer will likely be eligible for these loans. As noted, nonprofits can already apply for them, and the recently enacted CARES Act includes additional funding for the program.
SBA Forgivable Loans:
The CARES Act established other pathways for nonprofit relief by providing nearly $400 billion in payments and guarantees through the new “Paycheck Protection Program,” which will be administered through SBA’s 7(a) lending program.
This week, the Administration released guidance and the application for the Paycheck Protection Program (i.e., forgivable loans) and announced they will start accepting applications from nonprofits and small businesses beginning this Friday, April 3.
Under this program, a nonprofit can borrow up to 2.5 times its monthly payroll. The loan, which would be issued by a SBA-approved lender, has a 100 percent federal guarantee. To gain access to these resources, nonprofits of 500 or fewer employees primarily need to prove they existed and had employees as of February 2020. The federal government would pay the lender to defer all payments on the loan for up to six months.
Especially important for nonprofits, any organization that sustains full time employment levels over the course of the COVID-19 crisis could receive up to eight weeks of salary, wages, rent, and other operating expenses fully forgiven, converting a substantial share of the loan into a grant. Wages paid to an employee in excess of $100,000 per year would not be eligible for this funding. Competition may be intense for the loans, so nonprofits should move quickly.
You can access the SBA’s general COVID-19 resource page HERE.
Further, we wanted to share with you this useful TOOL from the U.S. Chamber of Commerce entitled, “Coronavirus Emergency Loans: Small Business Guide and Checklist.” This guide explains which nonprofits and companies are eligible for these new loans, what lenders will be looking for from your organization, how much you can borrow, how to have the loan forgiven and more. Finally, the Washington Post published a helpful Q&A on the Paycheck Protection Program today, including highlights from that interview, available HERE.
The America Forward team is following federal action related to COVID-19, with a special focus on the implementation of the many programs and new resources in the CARES Act. As we navigate this crisis together, America Forward will continue to provide information and analysis to help our Coalition members digest new federal legislation and understand its implications – both short-term and long-term.
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