Loans Available to Nonprofits through Small Business Administration
Tuesday, March 31, 2020
An Important Message to our Nonprofit Community:
While the Fox Cities nonprofit community continues to support and respond to immediate needs due to the COVID-19 outbreak, there are very important provisions within the CARES ACT (H.R. 748) to bring to your attention.
In order to assist you, we are providing information and urge you to evaluate options for funding as well as gather important resources to help guide you as you make decisions regarding your employees, their needs, and your capacity to deliver your mission to our community. Please reference the key documents linked at the bottom of this note for detailed information.
Please note the key provision, called the Paycheck Protection Program, the SBA 7(a) loan program allows 501(c)(3) charities to immediately take out loans equal to 2.5 times their average monthly payroll expenses. The loans come from traditional banks that have SBA authorization and the SBA provides a 100% guarantee. As long as you do not lay-off staff or reduce salaries, and so long as the loan funds are used to cover payroll expenses, mortgage interest/rent and utilities by June 30, 2020, the loan will be fully forgiven at the end of the year.
The SBA has not published the application and guidance to lenders, but we expect that as soon as Friday of this week.
Take these preliminary next steps:
- If you need board approval, seek it now.
- Check with your trusted financial lender to see if they provide SBA lending or can make a referral for you. (These loans will be appealing to lenders because of the 100% guarantee)
- Begin to prepare documentation you will need for the loan application:
- Proof of your payroll expenses for the 12 months preceding the date of application for the loan
- Payroll expenses do not include any portion of an individual's salary over $100k/year or federal tax payments
- Payroll expenses include salary and many benefits like health insurance and retirement
Additional information can be referenced for details and guidance in the following documents:
- Independent Sector: CARES Act Summary for Nonprofits details the wide range of loans and payroll tax credits that nonprofits will be eligible for as a result of the CARES Act.
- U.S. Chamber of Commerce: Coronavirus Emergency Loans Guide and Checklist for Small Businesses and Nonprofits
- Check the SBA website regularly
United Way Fox Cities is committed to supporting nonprofits and individuals during this challenging COVID-19 pandemic in addition to our ongoing commitment to build a stronger community for everyone.
Please reach out to us if you have questions and we will work to connect you with additional community volunteers and resources to assist you.
Peter C. Kelly
President and CEO
United Way Fox Cities