The CARES Act for Nonprofits & Social Enterprises
The CARES Act passed in Congress on Friday provides $2 trillion in COVID-19 Disaster Relief funds to small businesses and nonprofits to recover losses experienced during business closures and higher demand for social support services.
Like many nonprofits, Catalyst Kitchens members have suffered major losses with the COVID-19 economic crisis far from over. Between foodservice businesses closing and sky-rocketing hunger relief needs in all communities, most of our members can benefit from the CARES Stimulus Bill. We have compiled a high-level overview of how this bill pertains to nonprofits and social enterprises. This article contains many valuable resources that provide more detailed information about the loans available and how to access the funding.
Our first piece of advice to members, nonprofits, and social enterprises seeking economic relief through the CARES Act is to contact your bank or financial advisor soon. There is a large but limited pool of relief funds available and many businesses and organizations in need. We recommend starting the conversation now to see if your program can qualify and apply for funding.
The Paycheck Protection Program
The Paycheck Protection Program is designed for nonprofits to cover costs related to payroll, facilities costs, health and retirement benefits, and debt service for two months. This loan program is available for nonprofits with 500 or fewer employees, including full time and part time staff. Nonprofits that use the funds to retain employees between February 15th and June 30th can have these loans turned into grants for partial or full loan forgiveness.
Here is a Small Business Guide & Checklist that reviews the program and how to calculate the loan amount based on your organization or company’s payroll costs. Source: U.S. Chamber of Commerce
The Expanded Economic Injury Disaster Loan
The Expanded Economic Injury Disaster Loan (EIDL) program is offered through the Small Business Administration and would send approved nonprofits checks for $10,000 within three business days. It holds a 2.75% interest rate for nonprofits and treats $10,000 as a grant rather than a loan. This loan program is available for private nonprofit organizations, which excludes religious institutions and some other charitable organizations.
The Mid-Size Loan Program
The Mid-Size Loan program is designed for larger organizations that employ between 500 and 10,000 people. It is intended to help nonprofits retain their workforce at full wages and benefits through the end of September 2020. This loan is less defined and designed to service the gap between those who can access the Paycheck Protection Program and large industry stabilization loans. This loan does not include a potential loan forgiveness. The details of this program are still in development.
If your company has over 500 employees, you may still qualify for the Paycheck Protection Program or SBA Loan Forgiveness if you operate a food business. Check the National Restaurant Association site for more details.
For more details on each loan available through the CARES Act specific to nonprofits, check out this overview from the National Council for Nonprofits.
Don’t know how to get started?
The following questions might help point you in the right direction. Source: U.S. Senate Committee on Small Business & Entrepreneurship
Do you need:
• Capital to cover the cost of retaining employees? Then the Paycheck Protection Program might be right for you.
• A quick infusion of a smaller amount of cash to cover you right now? You might want to look into an Emergency Economic Injury Grant.
• To ease your fears about keeping up with payments on your current or potential SBA loan? The Small Business Debt Relief Program could help.
• Just some quality, free counseling to help you navigate this uncertain economic time? The resource partners listed in the Small Business Owner’s Guide might be your best bet.
See the Small Business Owner’s Guide to the CARES Act for more details.
Sources and further reading:
A useful two-page overview of the CARES Act programs from National Council of Nonprofits:
“What Nonprofits Should Know About the $2.2 Trillion Federal Covid-19 Aid” from the Chronicle of Philanthropy
Information for Self-Insured Nonprofits from the National Council of Nonprofits
Overview of the CARES Act from the National Council of Nonprofits