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Nonprofit CARES Act 3.5 – $484 Billion Relief Package – The Senate has passed the PPP Health Care Enhancement Act, also known as the “COVID-19 3.5” relief package. This new $484 billion package, which is expected to pass the House of Representatives today was originally designed to only be a $250 billion stop-gap measure.
New funding for nonprofits and small businesses will include 310 billion to replenish the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), a loan initiative aimed at helping charities and small businesses weather the economic fallout from the COVID-19 response. Of this amount, $60 billion would be set aside for smaller lending institutions such as credit unions and other community-based real financial institutions, with the goal of reaching underbanked businesses.
The package would also appropriate an additional $50 billion for SBA’s Disaster Loans Program Account and $10 billion for Emergency Economic Injury Disaster grants, while increasing the authorization level for the emergency economic grants from $10 billion to $20 billion. SBA would also receive more than $2 billion to cover salaries and expenses for federal employees. The remaining $75 billion is allocated for hospitals, healthcare and enhance COVID-19 testing. Here’s the complete breakdown:
- $310 billion in replenished funds for the Paycheck Protection Program (PPP), the main vehicle for providing assistance to nonprofits and businesses with 500 employees or fewer to get forgivable loans to cover payroll costs for an eight-week period.
- $12 billion for PPP administrative costs
- $50 billion for the SBA’s Economic Injury Disaster Loan program
- $10 billion for the SBA’s Emergency Economic Injury Grant program (Same as EIDL but $10,000 advance does not have to be paid back)
- $2 billion for SBA salaries and expenses
- $75 billion in emergency money for our health system
- $25 billion to increase testing and contact tracing capabilities
Nonprofit CARES Act 3.5 – $484 Billion Relief Package
Here’s what we’ve learned so far:
Now that the package has passed the Senate, the House will vote on the bill this today Thursday, April 23, where it is expected to pass.
CARES Act PHASE 4 IS COMING but not until May, with Congress expected to reconvene after May 4th. Among the potential topics CARES Act Phase 4 will likely include AN ADDITIONAL ROUND OF STIMULUS CHECKS, rent freeze, food stamps and extension of unemployment payments beyond the four-month period established by CARES. There is also speculation that Phase 4 will include an infrastructure package. In particular, need to rebuild the nation’s bridges, tunnels and roads and expand access to rural broadband.
Nonprofits continue to have PPP Loan monies deposited into their bank accounts despite last week’s announcement that the original $350 billion had been depleted.
PPP Loan terms have been further clarified:
- 1% Interest Rate
- 2 Year Term
- First payment can be deferred for 6 months (interest will accrue)
- Loan portion spent on payroll, utilities, rent will be forgiven if reported to SBA within seven weeks of actual date loan was received.
- New loan amount will be re-amortized by lender once forgiveness has been confirmed (your remaining loan will be smaller if you were eligible for forgiveness.
- The mechanism for reporting loan forgiveness has yet to be introduced
It is our new understanding that the initial advance from the Economic Injury Disaster Loan program does not require repayment. To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent, and mortgage payments.
About the Employee Retention Tax Credit: Please note nonprofits participating in the Paycheck Protection Loan Program are not eligible for this credit. CARES Act provides for a refundable payroll tax credit up to a $5,000 per employee for nonprofits where operations were fully or partially suspended due to a COVID-19 shutdown order or whose gross receipts declined by more than 50% when compared to the same quarter in the prior year. Nonprofits managers must consider the entity’s whole operations when determining the decline in revenue. This credit is available for wages paid or incurred from March 13, 2020 through December 31, 2020.
There is still no accounting of how many charities received EIDL or PPP monies. Last time around, 44% of the SBA loans went to 4% of loan requesters. That’s about 67,000 applications taking almost half of the resources. 74% of PPP loans were for under $150,000, demonstrating the accessibility of this program to even the smallest of small businesses. That’s true, and it’s a good thing, but regulators need to pay attention to the loan size distribution too.
Nonprofit CARES Act 3.5 – $484 Billion Relief Package was first posted at INSIDE CHARITY
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