[UPDATE: June 9, 2020]
The CARES Act was a helpful attempt to assist various sectors including nonprofits, but the chaotic roll-out and serious under-funding of the Paycheck Protection Program (PPP) – in particular – was disappointing. During April, Congress acted to replenish that fund but – again – it continued to be plagued by inconsistent rules and guidelines.
By late May, the House had passed a bill which includes significant fixes to the PPP. Several days later, the Senate approved the changes to the popular Paycheck Protection Program, and that legislation was signed into law. “The bill provides borrowers with additional flexibility and time to use PPP loan funds and still have the loan forgiven.”
[April 3, 2020]
The CARES Act was passed by Congress on March 27th, 2020 “provides numerous opportunities for existing nonprofit and tax-exempt organizations to reduce the stress that COVID-19 may cause on their finances, whether through loans, grants, or tax credits.”
The Small Business Administration’s website includes a full description of all of the possible types of aid and relief for small businesses – which expressly includes nonprofits. This category means entities with fewer than 500 employees. For large businesses and nonprofits, there is slightly different relief.
In particular, the CARES Act provides two types of loans.
The Paycheck Protection Program (PPP) is a loan up to $10 million which is forgivable in certain circumstances. There is no security or collateral required. Though the PPP is managed by the SBA, applicants must apply through SBA approved banks. Beginning April 3, 2020, the loans are considered on a first come, first serve basis. But these lenders report they are not yet prepared to process applications but – by mid-morning on the first day – they were already swamped with them.)
The Emergency Economic Injury Disaster Loans (EIDL) are also available without security or collateral. Amounts can be up to $2 million, but they are NOT forgivable. Applications are made directly to the SBA. )
FPLG is currently assisting clients to navigate and understand these programs, and to complete applications for both the PPP and the EIDL.