Non-Profits

Resources available for non-profits

Non-profits with 500 employees or less are eligible to apply for the Small Business Administration’s Paycheck Protection Program.  Qualifying entities are (501(c)3, 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C)).  Through this program, a nonprofit organization can apply to an approved lender for a loan of up to 250% of your average monthly payroll costs to cover payroll, as well as help with other expenses like rent, mortgage payments, and utilities.  Please refer to the small business section for more details on this SBA program.

The Treasury Department has released guidance on the Paycheck Protection Program.  To view it, please see the links below.

  • For a top-line overview of the program, click HERE
  • If you’re a lender, more information can be found HERE
  • If you’re a borrower, more information can be found HERE
  • The application for borrowers can be found HERE

Resources for nonprofits, including those with more than 500 employees

Low-interest loans to cover expenses: Non-profits that do not qualify for SBA grants may be eligible to receive direct loans available through U.S. Treasury and the Federal Reserve.  Qualifying medium-sized enterprises and non-profits are entities with 500-10,000 employees.  The Treasury Department and Federal Reserve will have a degree of flexibility in designing the new program, but the expectation is for loan terms to last no more than five years and to cover up to 100% of payroll over the previous 180 days, or 50% of revenues for the past year, for eligible organizations.

Underwriting requirements should be kept simple, based on employer size, creditworthiness as of January 2020, and the ability to produce recent tax returns or audited financial statements.  The law prescribes that the loans must carry an interest rate of no greater than 2% and to provide forbearance on principal and interest for at least the first 6 months.  Borrowers will also be required to protect workers.  Any loan recipient will have to attest that they’ll use the money to keep workers employed – at least to 90% of their payroll – and keep workers paid at close to full compensation and benefits.  Borrowers will also commit to rehiring their workforce back to preexisting levels upon the end of the COVID-19 health emergency.

The most efficient way to deliver fast credit to eligible organizations is through existing relationships with local lenders.  Under the program, any qualified organization should be able to receive financing at a local bank, credit union, CDFI, or qualified nonbank lender.

 

Other assistance to non-profits

  • Partial above-the-line deduction for charitable contributions: The CARES Act includes a $300 above-the-line deduction for charitable donations.
  • Refundable tax credits for employee retention: An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the new SBA Paycheck Protection Program.  Any business that has been forced to fully or partially suspend operations, or that has seen a significant drop in revenues (including donations), is eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.  For businesses with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed.  There is an overall limit on wages per employee of $10,000.  The credit will first be claimed against the business’s quarterly payroll tax liability and can then be recouped through a refundable tax credit.  There will also be options to receive advance payments.  More information about the Employee Retention Credit can be found HERE.
  • Deferral on payroll tax liability: This measure allows businesses to defer paying payroll tax until 2021.  The effective date is following enactment, meaning quarterly payroll due on April 15 can be deferred to 2021.  Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.  Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral.

Last Updated: April 2, 2020