Please see the links below for information from the National Council of Nonprofits regarding the CARES Act. The charts in the links provide helpful information in understanding the three major loan programs. The Nonprofit Association of the Midlands (NAM) provided similar information last week. I am amplifying it based upon studying these programs and the applications I have submitted thus far.
While the total CARES Act provides $349 billion in relief efforts, the programs are apparently “first come first serve” and are implemented through the Small Business Administration (SBA). Small businesses and independent contractors can file applications for this funding as well.
Briefly, the loan programs can be summarized as follows:
Paycheck Protection Program (PPP)
Provides two months of payroll funding covering almost all related employee salary and benefits as well as rent or mortgage payments for nonprofits of 500 or fewer employees up to $10 million. Applications are made through a lending institution and loans can be totally forgiven.
Expanded Economic Injury Disaster Loan (EIDL)
Provides an immediate grant advance of $10,000. Applications are made through the SBA directly. Loans up to $2 million are also available with looser credit standards.
Mid-Size Loan Program
Provides gap funding between the PPP and EIDL programs for nonprofits with employees between 500 and 10,000. (I have not researched this program as of yet).
Those of us familiar with drafting on-line grant proposals will find the PPP and EIDL emergency applications fairly straight forward.
I recommend pursuing the EIDL grant advance emergency loan immediately. This advance will be deposited into your nonprofit's bank account within a week and does not need to be paid back as long as guidelines are met. This is a “no brainer”. SBA suggests the application may take over two hours to complete. No grantsmanship is needed, the challenge is finding the appropriate organizational financial records. www.sba.gov/disaster
The PPP program can be a “life saver” for many. A prototype application is attached and is very simple to complete. Unfortunately, at this writing most lending institutions (responsible for processing applications and collecting loan payments) are only gearing up to accept applications since the SBA regulations were only released Thursday (April 2nd). Most banks are only accepting applications from current account holders or those with current loans. Still, the PPP program remains a major funding opportunity for any employer (as well the self employed). However, the demand is stifling banks as they are just establishing their application process (Bank of America received over 85,000 applications on 4/3/2020). See your financial institution to apply.
There are many unresolved issues to be finalized with the PPP program for all involved: the SBA, lending institutions and applicants. On a positive note, it appears many banks may have geared up over this past weekend.
My Advice –
- Read the National Council of Nonprofits information attached.
- Apply for the EIDL grant advance emergency loan immediately
- Contact your lending institution to apply for the PPP program.
Other aspects of the CARES Act not covered here that you may wish to research are:
- Self-Funded Nonprofits and Unemployment Insurance, partial reimbursement
- Charitable Giving Incentive, creates a new universal deduction for all taxpayers ($300)
- Employee Retention Payroll Tax Credit; Delayed Payment of Payroll Taxes
- Economic Stabilization Fund
- Federal Student Loans and PSLF
Please see the link below which provides several resources from National Council of Nonprofits concerning the latest COVID-19 resources.
Good luck, stay safe and healthy!!!
Paul J. Strawhecker MPA, ACFRE