May 27, 2020
Nonprofits Will Receive CARES Act Funding Charities
How Nonprofits Will Receive CARES Act Funding – Part One
March 30, 2020
Nonprofit Paycheck Protection Program (PPP) Application
April 1, 2020

CARES Act Nonprofit Application Form IS NOW ONLINE

CARES Act Nonprofit Application Form IS NOW ONLINE

CARES Act Nonprofit Application Form IS NOW ONLINE directs you to the new and functioning Small Business Administration’s (SBA) simplified EIDL online application and also clarifies the calculation for Paycheck Protection Program (PPP) loan forgiveness. IT ONLY TAKES 10 MINUTES TO APPLY!

CARES Act Nonprofit Application Form IS NOW ONLINE Economic Injury Disaster Loans (EIDLs)

(Click the link above to get started)

As an advisor who supports nonprofits and runs in a lot of charitable circles, I’ve seen a lot of pain, fear and anxiety these past few weeks. A lot of you are hurting and simply can’t find support right now. You’ve tried your best to prepare for slow downs —  saved some emergency cash, got a line of credit, etc .— but you couldn’t have imagined going from 100 to 0 in a matter of hours, leaving you with a lot of bills to pay including rent and payroll.

The median business holds cash reserves to cover 27 days of expenses,according to Chase. But even if you’re well-prepared with a three- to six-month buffer for your business, you still need to plan for what happens if that runs out. No one knows how long this will last. What you need right now is cash.

The government has stepped up to help. But with three stimulus bills already passed, the last of which was 854 pages, it’s hard to know where to focus. Today, I’ll explain the main two ways your nonprofit can get cash now that the CARES Act is law. We’ll also discuss the steps you need to take to make sure you can get your money as efficiently as possible.

Economic Injury Disaster Loans – CARES Act Nonprofit Application Form IS NOW ONLINE

The Small Business Administration’s (SBA) Economic Injury Disaster Loans (EIDLs) are the first line of support. These loans aren’t new. They’ve always been available in the event of disaster.  However, according to Alex Contreras, Director of Preparedness, Communication, & Coordination at the Office of Disaster Assistance for the SBA, this is the first time a virus or pandemic event has been defined as a disaster. Because of this declaration, businesses in every state and territory are now eligible to apply for Economic Injury Disaster loans.

The SBA offers many favorable terms in their EIDLs:

  • Loans are up to $2M
  • The term is 30 years
  • Interest Rates are 3.75% for small business and (2.75% for non-profits)
  • The first month’s payments are deferred a full year from the date of the promissory note.

On Friday, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It’s an estimated $2 trillion package, which specifically allots $10 Billion for EIDLs and $350 billion for Paycheck Protection Loans (more on those below) to help small businesses.

The EIDLs expanded provisions include: 

  • EIDLS can be approved by the SBA based solely on an applicant’s credit score (not repayment ability and no tax return is required). Mr. Contreras specified that a prior bankruptcy doesn’t disqualify you.
  • EIDLS smaller than $200,000 can be approved without a personal guarantee. They are also not requiring real estate as collateral and will take a general security interest in business property.
  • Borrowers can receive $10,000 in an emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments or repaying obligations that cannot be met due to revenue loss.
  • It expands access to sole proprietors or independent contractors, as well as tribal businesses, cooperatives, and ESOPs with fewer than 500 employees and all non-profits including 501(c)(6)s.

The $10,000 emergency cash grants are particularly interesting. As Mr. Contreras explained it, applicants can get the emergency cash even if they don’t qualify for additional funds. Because lending decisions are based on self-certification and the applicant’s credit score, the review process should go quickly. CARES also waives the requirement that you be unable to obtain credit elsewhere. That means you can apply even if you already have a credit line.

If you apply for cash for your nonprofit directly through the SBA at www.SBA.gov/disaster there are no loan fees, guarantee fees or prepayment fees. As of March 30, the new streamlined CASH FOR YOUR NONPROFIT ONLINE APPLICATION is up and running. Make sure to apply for Economic Injury for the Coronavirus, rather than physical damage due to another disaster (that is a different declaration number).

CARES Act Nonprofit Application Form IS NOW ONLINE Economic Injury Disaster Loans (EIDLs)

You have to have been in business by January 31, 2020 to qualify, so you can’t start a business now and receive this kind of grant.  The SBA also offers other information and programming at www.sba.gov/coronavirus.

How long will it take to get the money?  Unfortunately, Mr. Contreras could not give a definitive timeline from application to approval on these loans. There are some 30 million small businesses in the United States. In a busy year,  the SBA processes 800,000 applications. If the 3.3 million unemployment numbers show anything, there will be a lot of demand for this relief (and systems may be overloaded). My advice: apply as soon as you can.

Paycheck Protection Program (PPP) Loan Guarantee

The CARES Act’s Paycheck Protection Program Loan Guarantee offers another source of help.  Under this program, the SBA backs small-business loans through local lenders. According to William Briggs, Deputy Associate Administrator in the Office of Capital Access in the SBA, they currently work with 1800 lenders and plan to expand that given the anticipated demand.

Here are the particulars of this loan program:

  • Offered to nonpofits with fewer than 500 employees, select types of business with fewer than 1,500 employees, 501(c)(3) non-profits with fewer than 500 workers and some 501(C)(19) veteran organization (have to be in operation before February 15, 2020)
  • Self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply (again, you have to be in operation before February 15, 2020).
  • Loans are given up to a maximum of the lesser of $10 million, or 2.5 times the average monthly payroll costs – including wages for employees making under $100,000, as well as expenses for paid sick leave, healthcare and other benefits –  during the 1-year period before the date on which the loan was made.
  • The maximum interest rate under this program is 4%
  • The loan term is up to 10 years
  • No personal guarantee or collateral is required for the loan
  • Payments are deferred up to six to 12 months
  • Part of this loan may be forgiven and not counted as income to you, if it’s spent during the first eight weeks on operating expenses.

As with the $10,000 advance in EDILs, loan forgiveness provisions are generous. Loans are forgiven when the proceeds are used for any of these costs:

  • Payroll costs, excluding prorated amounts for individuals with compensation greater than $100,000
  • Rent pursuant to a lease in force before February 15, 2020
  • Electricity, gas, water, transportation, telephone, or internet access expenses for services which began before February 15, 2020
  • Group health insurance premiums and other healthcare costs.

Be careful here. In order for the amounts to be forgiven, you must maintain the same average number of employees for the first eight-week period beginning on the origination date of the loan as you did from February 15, 2019 – June 30, 2019 or from January 1, 2020 until February 15, 2020. If you don’t meet this requirement, the amount forgiven is reduced. You incur additional reductions if you cut compensation for employees who make under $100,000 by more than 25%, as compared to the most recent quarter. (The US Chamber of Commerce offers a step-by-step calculation here).

And of course there’s an exception to the exception: you won’t be penalized for a reduction in employment or wages during the period from February 15, 2020 to April 26, 2020, if you rehire employees that you previously laid off or restore any decreases in wages or salaries by June 30, 2020.

As I mentioned above, you apply for the Paycheck Protection Loan directly through your local lending institution. As a business owner, you must personally certify that your company qualifies as a small business (you can check the North American Industry Classification System (NAICS) small business standards here).

Experts expect very significant demand for this type of loan. You can help yourself prepare by using this checklist from the Chamber of Commerce and contacting your local lender.

Tricks of the Trade

Both of these programs can provide a significant boost to struggling businesses. You can use these loan proceeds to pay a variety of working capital —  payroll, rent, utilities, etc.

The demand will be high, so it’s important to make sure you apply for the right type of loan for your business. Here are some other helpful tips from the webinar that may come in handy:

  • Apply! If you need funding now, or think you may need it in the future, you might as well apply now. You’re under no obligation to take the loan. And as I mentioned, there are no guarantee fees, servicing fee or prepayment fees.
  • EDILs are based on working capital needs, so make sure you have a good sense of what those are.
  • You can apply for both types of loans, as long as they cover different expenses(not a duplicative purpose). This is also true if you’re pursuing other local or regional government assistance.
  • For the EDILs in particular, the SBA does not work with “loan packagers.” So, there’s no need to pay someone to put an application together for you. You can apply directly through the website.
  • Make sure to specify the economic loss as it pertains to COVID-19. There’s no need to fill out the physical damage part, if that doesn’t apply to you.

We are here to support you as you secure the funding you need for your nonprofit. As I’m sure a lot of issues and questions will come up as the CARES provisions roll out, I would love to hear from you how it’s going. Message or email us at [email protected]

CARES Act Nonprofit Application Form IS NOW ONLINE was adapted from Forbes Council’s Getting Cash For Your Small Business Through The CARES Act

CARES Act Nonprofit Application Form IS NOW ONLINE was first posted at INSIDE CHARITY

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32 Comments

  1. We are a non profit.
    We were able to stay open until March 28th even though our business was down 30%. My question if we paid our employees until then and plan to recall them as soon as things improve can we borrow from SBA the payroll we’ve already paid during all this reduction of income along with operations expenses?

  2. Pamela Cook says:

    Our non-profit does not have “employees” all of our staff work as contracted labor, will we qualify? We lost all operating capitol when we had to cancel our State Conference that was scheduled for April 16-18, 2020.

    We are facing not being able to pay our staff, not being able to pay student scholarships and may have to discontinue student programming.

    • Jimmy LaRose says:

      Pamela, this is a great question that we think we may have figured it our (but are not completely sure). We know that the PPP Loan amount is going to be calculated based on a nonprofit’s Payroll Records. We also know that the actual individual independent contractor can apply for relief on April 10. We are of the opinion that because independent contractors are repeatedly mentioned many nonprofits may have perceived that they can request a loan amount that includes independent contractor payments. WE WILL FIND OUT FOR SURE WHEN THE LENDERS KNOW MORE. We have an unconfirmed hunch that the nonprofit’s loan amount will be calculated based on actual payroll ONLY and NOT include monies paid to independent contracts. Our reasoning is based in part on:

      #1 CARES Act Bill says loan amounts will be calculated based on last months payroll multiplied by 2.5
      #2 PPP Application asks what was the amount of your payroll last month
      #3 Financial Lenders are asking for your payroll register and your 940 & 941 payroll tax statements

  3. Lisa Van Zyll says:

    I received this question from one of our NANOE members today.

    I am very interested to find out more about getting some relief from the CARES act “Paycheck Protection Program Loans” SBA 7(a).

    We are a small non-profit, and already have been severely impacted by the pandemic; our major annual fundraiser has been postponed indefinitely, and most of our programs have been put on hold. We desperately want to keep our Executive Director employed!

    From the outline you posted, I believe we would qualify. Please let me know how we can apply for this assistance in these difficult times.

    • Jimmy LaRose says:

      Lisa,

      Nonprofits should first meet with their local banks who manage their checking and saving accounts. We met with two SBA 7(a) approved lenders (well-known banks) to compare their processes and product. Their loan representatives were well-informed and transparent about what’s really happening behind the scenes. Here’s what we learned:

      1. Both lenders indicated the U.S. Treasury and Small Business Administration were having difficulty supplying lenders the information/infrastructure needed to get started.
      2. Despite the April 3rd open application date neither lender knew the date THEIR INSTITUTION would be begin processing applications.
      3. One of the two lenders had a hunch that they would be processing applications on Monday.
      4. Both lenders indicated they would only be providing PPP Loans TO EXISTING CUSTOMERS ONLY. (New customers need not apply if they are seeking PPP.)
      5. One lender indicated their application process would be PERFORMED BY THE APPLICANT using a custom website portal on their bank’s website.
      6. One lender indicated they are gathering customer documentation (see list below) and WOULD USE THEIR STAFF to process each application.
      7.They both indicated their competition, BANK OF AMERICA, was only processing loans for nonprofit customers who had PREVIOUSLY ESTABLISHED credit with BOA.

      Both lenders provided a LIST OF DOCUMENTS nonprofits will need to organize

      1. Completed PPP Loan Application
      2. 2019 Form 990 Tax Return (2018 if 2019 is not available)
      3. 941 Tax Liability Detail 2019
      4. 941 Tax Liability Detail 2020
      5. Payroll Register 2019
      6. Payroll Register 2020
      7. Statement of Activity (P&L) 2019
      8. Statement of Activity (P&L) 2020
      9. Articles of Incorporation
      10. Utility Bills 2020
      11. Proof of Employees U.S. Citizenship

      In the event their banks are not providing PPP Loan services there may be another option. Though we are not endorsing or recommending lenders, nonprofits may find it interesting that Kabbage.com has indicated they are processing PPP Loan Applications online. Here’s their website:

      https://www.kabbage.com/paycheck-protection-program-loans/

  4. Mitch H says:

    I am a sole proprietor who buys and improves real estate for a living. I sold three houses 5 years ago with monthly mortgages due. All three new owners stopped paying and I am foreclosing on these properties. The first foreclosure auction is scheduled for June 2019 — two months from now. That auction was going to bring me the first income from these properties in over a year. That auction will almost certainly be postponed because of this corona crisis. The 2nd and 3rd homes were to be auctioned in July. I am expecting all of these foreclosure auctions to either fail or be postponed.

    In the meantime, the costs of holding and maintaining these properties will be challenging. Also, the property tax burden I will be assuming is gigantic, enormous.

    Do I qualify for this program?

  5. Denise M Prehm says:

    Due to covid 19 I have to apply for unemployment. Am I automatically enrolled into the cares act to obtain the extra funds?

    • Jimmy LaRose says:

      Denise,

      We think you have it right. The CARES Act increased your state’s unemployment wage an additional $600. It’s our understanding that ff you have already applied for unemployment benefits at some point your weekly benefit should automatically increase ($600) due to the CARES Act.

  6. Walker says:

    Seems that only private charities are eligible, not public ones. You should note that, perhaps.

    • Jimmy LaRose says:

      Walker,

      We understand why you may think that ONLY PRIVATE CHARITIES are eligible. It’s our understanding that both public and private charities are eligible according to the SBA. Here’s what the SBA website has to say:

      “Applicant is a private non-profit organization that is a non-governmental agency or entity that currently has an effective ruling letter from the IRS granting tax exemption under sections 501(c),(d), or (e) of the Internal Revenue Code of 1954, OR SATISFACTORY EVIDENCE from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law, or a faith-based organization.”

      You can learn more by visiting:

      https://www.sba.gov/sites/default/files/resource_files/how_to_disaster_app_March_2020.pdf

  7. Walker says:

    For the EIDLs, that is. It seems all nonprofits will be eligible for the PPPs once the application is open. But only private nonprofits are eligible for the EDILs.

    • Jimmy LaRose says:

      Regarding EIDLs,

      “Applicant is a private non-profit organization that is a non-governmental agency or entity that currently has an effective ruling letter from the IRS granting tax exemption under sections 501(c),(d), or (e) of the Internal Revenue Code of 1954, OR SATISFACTORY EVIDENCE from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law, or a faith-based organization.”

  8. Molly Willenbring says:

    I’m trying to apply for EIDL for my small nonprofit and it asks for owners – we are a 501c3 corp so there are no owners. Any idea how to get the application filled out? Thank you for your work on this!

    • Jimmy LaRose says:

      Molly,

      We’ve heard from over 100 nonprofits regarding the EIDL application found at:

      https://www.sba.gov/funding-programs/disaster-assistance

      It is our understanding that the EIDL site does not use the term “owners”

      We do know that the PPP loan application has a line item name “owners” Here’s how we’ve responded

      First, the The CARES Act bill was hastily put together. Second, the PPP Loan application was hastily put together. When it comes to the line about declaring the name of the “20% owner.” We made the decision to leave it blank understanding that the lender may ask us to place the name of the Board Chairman, Board Officers or all Board Members. EVEN THOUGH NONE OF THEM ARE OWNERS. Simply put, the SBA is using the same form for both for-profit and nonprofit businesses even though nonprofits do not have owners. On Tuesday we spoke to our lender. We completed the loan application yesterday. They invited us to forward our completed PPP Application and our 2019 Form 990 to them and to wait for further instructions.

      However, since some of the actual financial lenders are creating their own online application forms THEY MAY correct this and distinguish for-profit applications from nonprofit applications (HOPEFULLY)

      • Molly says:

        Thank you!
        The EIDL application asks for Owners/Agents but then requires a percent ownership for each of them. Some EDs I’m talking with have put their names/info in this spot and then 0% ownership. That seems to work to be able to move forward in the application.
        Thanks for the advice on the PPP app!

        • Jimmy LaRose says:

          Molly,

          Couple of things here. We found out yesterday (March 3rd) that different lenders are creating their own applications for PPP loans which may vary and have different questions and requirements. We’re hoping they differentiate between for-profit and nonprofits with custom applications that make more sense.

          Regarding the original SBA PPP Loan application here’s a few thoughts. First, the The CARES Act bill was hastily put together. Second, the PPP Loan application was hastily put together. When it comes to the line about declaring the name of the “20% owner.” We made the decision to leave it blank understanding that the lender may ask us to place the name of the Board Chairman, Board Officers or all Board Members. EVEN THOUGH NONE OF THEM ARE OWNERS. Simply put, the SBA is using the same form for both for-profit and nonprofit businesses even though nonprofits do not have owners. We completed the loan application, left many items blank, forwarded it onto our lender and are waiting for further instructions.

          • Kristin Lofgren says:

            Hello, I have the same issue as Molly. The EIDL (not talking about PPP) loan application requires me to fill in an “owners” page, even though I already marked it as a not-for-profit. This seems like an error in the application. There aren’t any owners in a not-for-profit yet it’s requiring me to fill out this page….

          • Jimmy LaRose says:

            Kristin,

            When it comes to the EIDL line about declaring the name of the owner. We made the decision to place the name of the Board Chairman EVEN THOUGH BOARD MEMBERS ARE NOT OWNERS. Simply put, the SBA is using the same form for both for-profit and nonprofit businesses even though nonprofits do not have owners.

  9. Madelene Trujillo says:

    I just closed on my dental practice March 1, 2020z. My company is 13 years old although I had just used it to work as an independent contractor at other offices. Do I qualify for the ppp

    • Jimmy LaRose says:

      Madelene,

      Our understanding and limited response to your question is YES. According to the CARES Act independent contractor can apply for relief on April 10. Furthermore the documentation indicates organizations that were established before February 15, 2020 may participate.

      The Small Business Administration’s (SBA) Economic Injury Disaster Loans (EIDLs) may be your first line of support.

      https://www.sba.gov/funding-programs/disaster-assistance

      These loans aren’t new. They’ve always been available in the event of disaster. However, according to Alex Contreras, Director of Preparedness, Communication, & Coordination at the Office of Disaster Assistance for the SBA, this is the first time a virus or pandemic event has been defined as a disaster. Because of this declaration, businesses in every state and territory are now eligible to apply for Economic Injury Disaster loans.

      On another note, we would recommend contacting your local bank about your Independent Contractor eligibility for Paycheck Protection Program Loans.

      https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf

  10. Greg Scherer says:

    Have you come across further clarification on what exactly the EIDL means by “Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020)”. For example are most people reporting as of the last fiscal year end be it 6/30, 12/31 or other?

  11. Sheri says:

    To whom it may concern,
    I have a non-profit and want to make sure we do not have to pay back the funds, so my question is…If we do not have to pay the funds back why are they calling it a loan?
    My other question is….If this is suppose to be a grant why are they pulling our credit?

    • Jimmy LaRose says:

      Sheri,

      Your nonprofit will first receive a Paycheck Protection Program Loan. At a later date you will report what bill you paid using the loan. Any payroll, rent or utilities paid will be forgiven.

  12. We are a food pantry, a 501(c)(3) organization. All our workers are volunteers and we we receive and donate food for any one who needs food free. We are supported by the Food Bank. We buy food from local stores when we don’t receive the needed food from Food Bank. Our demand has quadrupled. We dont have money to buy food. Is there a provision in Care to receive some grant? We operate from a church building which is given to us free of charge.

  13. Deneen Sandidge says:

    We are a church based organization and we are currently providing live stream services. We are not receiving tithes or any income to pay mortgage, ministers or musicians. How can we utilize the Cares Act to fund these needs? Our church is less than 100 members.

  14. […] great Q&A and updated practical info. How Nonprofits Will Receive Cares Act Funding (Pt. 1), Nonprofit Cares Act Funding Applications is now Online, Nonprofit Nightmare – PPP Loans […]

  15. Kevin says:

    Hello,

    Quick question… I am an independent contractor looking to fund a film project under the Cares Act. Is it too late for me to apply… if not what is the safest and best way to apply… ie, what site or bank?

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