Pay your staff and keep your nonprofit afloat for the next two months by applying this very day for emergency funding provided through the Coronavirus Aid, Relief, and Economic Security Act (CARES).
The Paycheck Protection Program opens today, offering funds for nonprofits and small businesses struggling in the coronavirus epidemic.
That’s the message from David L. Thompson, vice president of public policy at the National Council of Nonprofits.
“Contact your loan officer immediately. Get in the queue,” he said.
The money is to pay staff and operating costs for up to 2½ months. It’s also available to sole proprietors.
Through local lenders from the Small Business Administration (SBA) $349 billion is available.
Businesses and 501(c)(3)s with fewer than 500 employees can apply. Funding is given as a loan, but it can be forgiven if employees are kept on the payroll for eight weeks and funds are spent on payroll, mortgage interest, rent or utilities, according to the SBA.
The urgency is because huge numbers of nonprofits and businesses are expected to apply to the program.
“The concern is that they are going to run out of money,” Thompson said.
The United States has 1.3 million charitable nonprofits and 97% of them have revenue of less than $1 million, he said. The country has many more small businesses.
Contact your bank to determine whether they are an SBA lender, the Afterschool Alliance said in an email Thursday. Get their guidance, gather supporting documents and begin filling out the application.
If you don’t have a banker or a financial officer in your organization, get somebody’s email and get in line, said Hillary Salmons, executive director of the Providence After School Alliance.
“All these bankers are working from home,” she said. Call your accountant or auditor if you don’t have any information, she said.
Youth-serving organizations that are part of a network like PASA are likely to have a lot of information, she said. But for a small nonprofit that is not as connected, “this could be intimidating,” she said.
“Turn to your local community foundation,” she advised.
Thompson said to gather the following documents:
- Payroll records
- Form 941, the tax form used for submitting payroll taxes
- Mortgage or lease.
Banks may use their own application forms, which could ask for information that does not pertain to nonprofits, he said.
If there’s a blank asking for the name of the owner, skip it, Thompson said.
Some banks are asking for a NAICS code, he said. This is not mandatory, he said.
Proofread the application carefully, he advised. Don’t risk making a typo and getting put in the back of the queue.
The CARES Act also provides two other types of funding for nonprofits. Fast grants of $10,000 can come through an existing SBA program, the Economic Injury Disaster Loan. This loan doesn’t apply to all nonprofits, but it is intended to provide funds in three days for payroll and operations.
A program is being set up to fund nonprofits with 500 to 10,000 employees. The Mid-Sized Loan Program is intended to help organizations retain 90% of their workforce.
All three programs are compared here by the National Council of Nonprofits.