Info Nonprofits Need Regarding the New Stimulus Package

Nonprofits have been struggling to stay afloat amidst the restrictions put in place due to the COVID-19 pandemic, just as other businesses have been.

They have been forced to cancel or postpone vital events and fundraisers that allow them to pay for staff and services needed in our community. This has the potential to have a catastrophic effect on their ability to continue addressing some of our community’s toughest problems. They need our support now more than ever. In this time of need, please consider donating to a few of your favorites directly or to dozens a month through Givable’s donation platform.

Thankfully there is some assistance for nonprofits in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law last week. Below are a few options in that bill that were created to help nonprofits and other businesses retain current employees and rehire ones that were furloughed or laid off.

Paycheck Protection Program

  • This portion of the CARES Act has $349 billion allocated to it
  • Allows for employers with fewer than 500 employees, including 501(c)(3) nonprofits, to access a loan for up to 250% of average monthly payroll with a $10 million maximum
  • Loans are intended to cover payroll (for employees making $100,000/year or less), benefits, rent/mortgage, and other operating expenses for 8 weeks
    • The first 6 months of payments are deferred automatically
  • Loans are forgivable if the funds are used to pay for salaries, group health insurance, rent, mortgage interest payments, utilities, or paid sick/medical leave
    • If you only apply for and receive funds for these expenses, then the loan is in essence a grant
    • Loans are forgivable after the 8-week period they were used for – ex. Loan used for April 1 – May 27 will become forgivable starting May 28
    • Employers must retain 100% of their workforce covered by the loan to have their loan forgiven
    • The percentage of the loan that will be forgiven will be decreased by the proportional amount of any employees laid off – ex. If payroll expenses for employees making $100,000/year or less decreases by 50% in the 8-week period of the loan, then only 50% of the loan will be forgiven
    • Nonprofits may rehire any laid off workers and still be forgiven if they keep them employed for the entirety of the 8 week loan period
    • Any accrued interest from the loan will also be forgivable if the interest on the loans is used for the items listed above
  • Loans may cover expenses from anytime February 15, 2020 – June 30, 2020
    • Borrowers choose which 8 weeks in that time period
  • The interest rate of the loan will differ depending on credit, but the terms of the loans are caped at 4% interest rate and a 10-year term
  • Loans may be applied for through a Small Business Administration (SBA) lender who provides 7(a) lending programs – most local financial institutions offer these, we recommend starting with the institution you currently use for your business banking
  • There is no collateral needed for the loan
  • No personal guarantee is needed for the loan
  • The loan program will be running and accepting applications no later than April 11, 2020
  • Deadline to apply for loans is June 30, 2020

Expanded Economic Injury Disaster Loan (EIDL) & Emergency Grants

  • This portion of the CARES Act has $10 billion allocated to it
  • The eligible nonprofits is more limited and includes nursing homes, food kitchens, educational facilities, senior citizen centers, daycare centers, playhouses, and shelters with fewer than 500 employees
  • 2.75% interest rate for nonprofits
  • $10,000 advance may be received within 3 days of application
    • Will be forgiven if applicant is denied the EIDL loan
  • Loans are intended to cover payroll, paid sick leave, increased costs from issues with their supply chain, mortgage, other debts
  • Up to $2 million per nonprofit is available
  • Personal guarantee is waived for up to $200,000 but required for loans of more than that amount
  • Credit standards have been loosed for this loan
  • Check the SBA EIDL page for more updates including how to apply

Mid-Size Loan Program

  • For nonprofits with 500-10,000 employees
  • Intended to be used to retain at least 90% of employees and will cover their wages and benefits
  • Nonprofits may apply for this loan at their local financial institutions – once the loan program has been established
  • Interest rate will be 2%
  • No payments or interest for first 6 months
  • Loans will NOT be forgiven
  • Other details have not yet been released by the SBA or Treasury Department

Consider supporting local nonprofits by donating as little as $8/month (25¢ per weekday) to dozens of local charities a month with Givable’s innovative donation platform.

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