Economic Injury Disaster Loans

Under the CARES Act, nonprofits can receive Economic Injury Disaster Loans (EIDLs) to assist with accounts payable, fixed debt, payroll, and other bills. EIDLs include an opportunity to receive a $10,000 advance within three business days of application. This $10,000 loan advance will not have to be repaid, essentially turning the $10,000 into a grant. 

These loans will be made on a first come, first served basis. Importantly, Congress has released new information clarifying that this grant is not limited to nonprofits of 500 or fewer employees; nonprofits of all sizes are eligible. 

General Loan Information:

• Nonprofits can receive up to $2 million, with an interest rate of 2.75% and repayment terms up to 30 years.

• The loan includes an option for a $10,000 advance that will not have to be repaid.

How to Apply:

• Apply here. The application is very short and requires minimal information.

• When given the option in the application, select “I would like to be considered for an advance of up to $10,000.”

SBA Paycheck Protection Program Loans

Under the CARES Act, 501(c)3 nonprofits are eligible for Paycheck Protection Program loans (PPP loans) through SBA lenders. These loans are meant to help cover payroll, rent, mortgage, and utility costs. Up to eight weeks worth of these costs may be forgiven by the federal government, essentially turning the loan into a grant. PPP loans are open to nonprofits with 500 or fewer employees.

There is nothing in the CARES Act that disqualifies nonprofit charter school organizations from eligibility; so, unless there is official guidance from the SBA to the contrary, we recommend charter schools with 500 or fewer employees seriously consider this opportunity. Lenders may begin processing loan applications as soon as April 3, 2020. These loans will be made on a first come, first served basis; your charter organization should begin preparing to apply right now.

General Loan Information:

• The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

• Only nonprofits with 500 or fewer employees are eligible.

• Maximum loan amounts are equal to up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount, with a $10 million cap. Payroll costs will be capped at $100,000 annualized for each employee.

• The full amount of this loan can be forgiven, essentially turning this loan into a grant. You will only owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the eight weeks after receiving the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also be required to repay a portion of the loan if you do not maintain your staff and payroll at the same level.

• This loan has a maturity of 2 years and a fixed interest rate of 0.5%.

• This Sample Calculation Document from the Jewish Federations of North America can help you determine the loan and loan forgiveness amounts for which your organization may be eligible.

• It is important to note that if an organization receives an EIDL advance of $10,000 and then also a PPP loan, the $10,000 advance will be subtracted from the calculation of the PPP loan forgiveness amount.

How to Prepare and Apply:

• Review the SBA’s Sample Application Form and PPP Borrower Information Sheet.

• Only those banks and lending institutions designated as SBA lenders will be making PPP loans. Check to ensure your bank is an SBA lender, beginning on page 30 of this Louisiana directory.

• Reach out to your bank:

  • Let them know you would like to apply for a PPP loan.

  • Ask for an application and information concerning the specific steps you need to take to apply.

• Ensure you have taken the steps necessary under your internal governance process to apply for a loan. Most charter organization bylaws and finance procedures require approval from the charter board or finance committee in order to take out a loan.

Tracking Expenses

Charter organizations may receive an EIDL advance of $10,000 and a PPP loan. However, the loans must be used for different purposes (e.g., supplies purchases covered by the EIDL, and payroll covered by the PPP loan). In addition, if a charter organization receives an EIDL advance of $10,000 and then a PPP loan, the $10,0000 EIDL advance will be subtracted from the calculation of the PPP loan forgiveness amount. Because of this, it is very important that your organization carefully track expenses and how those expenses are being paid during this time.

Next Steps

To take advantage of these opportunities, nonprofit charter organizations should take the following steps now:

1. Apply for an Economic Injury Disaster Loan (EIDL) here; request an emergency advance of $10,000.

2. Take action now to be ready to apply for a Paycheck Protection Program (PPP) loan.

3. Be on the lookout for continued updates from NSNO as we learn more.

4. Make sure to check LAPCS’ COVID-19 Resources page for additional insights, tools, and ongoing updates.

5. Please reach out to Jené Liggins, NSNO’s Director of Policy, at jene@nsno.org for any questions you may have.