Economic Assistance for Nonprofits and Small Businesses
Federal Update: March 31, 2020
From the Afterschool Alliance:
We want to let you know of two time-sensitive economic assistance opportunities for nonprofits, made available through the federal government’s Small Business Administration (SBA) department. These programs are designed to offset financial hardship due to COVID-19 and are open to both for-profit and non-profit organizations. We encourage you to apply rapidly as funds will go fast.
SBA 7(a) Paycheck Protection Program
Under the CARES Act stimulus bill, nonprofits and small businesses with fewer than 500 employees will be eligible for loans to meet payroll and other qualifying costs. Much of the loan is forgivable if you keep staff on payroll during the loan period (currently March 1 through June 30). This, in essence, turns a portion of the loan into a GOS grant. The total loan fund is expected to be $349B, and loans will be given out on a first-come, first-served basis. Recipients do not have to certify that they are unable to obtain credit elsewhere.
- Loan amount is 2.5 times the organization’s average monthly payroll, with pay capped at $100,000 per employee
- Up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels through June 30
- The application is not yet live, but details are emerging on the SBA website; we encourage you to keep checking the website and complete the application as soon as it becomes available
SBA Economic Injury Disaster Loans
EID loans offering up to $2M in assistance are already available on a first-come, first-served basis to nonprofits to help overcome temporary loss in revenue caused by COVID-19. These loans are similar to other disaster relief loans and do not include loan forgiveness. The application is straightforward and can be completed online now.
- Loans offer up to $2M in assistance
- The interest rate for nonprofits is 2.75%, with repayment terms of up to 30 years. Funds may be used to pay fixed debt, payroll, accounts payable, and other bills that can’t be paid due to the impact of restrictions.
- Organizations cannot receive funding from both programs unless the loan applications are for different purposes (i.e. personnel and rent costs for 7(a) and other operating expenses for EIDL)
- Look into the 7(a) loans first, due to the larger funding amount and forgivable loan provision. The application is expected to open this week on SBA’s website.
- Develop a relationship with a qualifying local lender ASAP, especially if you don’t yet have one, since loans are made directly through local 7(a) lending institutions. Here is a list of qualifying local lenders.
- Prepare your documents while waiting for the application to open.
- Consider whether your organization can take advantage of any other additional COVID-19 relief programs. Candid.org has a running list on their website, with many local assistance programs.
- Review the The Branded Startup’s “Nonprofit Survival Guide” (attached) for leadership advice, budget adjustments, talking points for donors and funders, and opportunties for growth in the new normal.
As always, we will continue to gather resources and publish them on our COVID-19 webpage. If you have resources or stories about how programs in your community are responding to the outbreak, email Alexis Steines email@example.com.