Federal Disaster Relief Funding Available to Nonprofits
The Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law by the President on March 27 includes three distinct loan programs nonprofit organizations can access to get cash to meet operating costs, including retaining or rehiring staff, and to continue to fulfill their missions. It also encourages charitable giving to nonprofits in this crucial period by including three tax provisions for charitable donors during 2020.
To qualify to access these revenue sources, nonprofit organizations must be operating and recognized by the IRS as a public, charitable 501(c)3 organization.
Paycheck Protection Program (PPP)
An emergency loan program based on the Small Business Administration’s (SBA) loan process but with important enhancements to assist nonprofits. Nonprofit and for-profit organizations with 500 or fewer employees can request funds to pay staff and operating costs for two months. By carefully following the rules, such as not laying off staff, the loans will be forgiven and essentially become a grant to your organization. Just as with SBA’s longstanding loan process, the PPP is administered through local lending institutions (about 1,800 nationally with more to be added soon). Already familiar with the SBA loan process, there should not be too much of a learning curve for them to get up to speed on PPP. The SBA has until April 11 to announce its guidance to participating institutions, so it will take a little while before organizations can apply for PPP loans. Congress appropriated $349 billion for this program. Learn more here. (Sec. 1102 of the bill)
Expanded Economic Injury Disaster Loan (EIDL) & Emergency Grants
Looser credit standards are used with EIDL resulting in a quick grant process that could direct $10,000 to nonprofits within three days to pay for salary and operating expenses. Not every nonprofit will qualify, but this could be a viable option. $10 billion was set aside for this opportunity. Learn more here. (Sec. 1110 of the bill)
Mid-Size Loan Program
This loan program still needs to be built out, but once in place, it would provide loans to nonprofits and other entities employing 500 to 10,000 people to help them retain at least 90 percent of their workforces. There is no website link yet. Look for information to be announced soon. (Sec. 4003 of the bill)
To help you evaluate loan programs and determine which might work best for your organization, we’ve included on our website a helpful comparison chart, Loan Options for Nonprofits, created by the National Council of Nonprofits.