Independent Sector CARES Act Webinar

Before the CARES Act was passed, Independent Sector had requested that Congress provide considerable relief for small businesses including $60 billion in emergency funding proposals and a universal charitable deduction. Additionally, the organization asked that any relief bill aiming to assist small businesses should ensure all nonprofits qualify for new small business loans. Over 200 national nonprofit organizations signed on to the community letter in support of these efforts. With the CARES Act now signed into law, small businesses and organizations joined Independent Sector’s  “Navigating the CARES Act” webinar,  which gave a general overview of the CARES Act and what it could do for small businesses, nonprofit organizations, and unemployed individuals. The Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act, is the largest economic relief package in U.S. history. The law, which totals $2.2 trillion, provides $377 million for small business assistance, $250 million for unemployment insurance, and $150 billion for state, tribal, and local government assistance.

The legislation provides low interest forgivable loans for small businesses. Below is further information on five key funds that are available to small businesses and nonprofit organizations. Additional details on the funds as well as individual relief resources are available here.

Paycheck Protection Program (PPP) 

• Organizations can apply for this SBA 7(a) lending program available through any lending institution with a maximum amount of $10 million or 2.5 times the average monthly payroll
• Eligible organizations include 501(c)(3) and 501(c)(19) organizations
• This loan provides forgiveness for 8 weeks worth of costs related to payroll, mortgage interest, rent, and utilities

Economic Injury Disaster Loans and Advance

• This fund is an expansion of the SBA disaster loan program to help businesses and homeowners.
• Private nonprofits are allowed to apply to this fund as well as request a $10,000 advance of the loan. Any entity that applies for the loan will be eligible for the advance even if they were not approved for the loan.
• Applicants are not required to repay the advance, but if they apply for and receive money through a PPP loan, the $10,000 advance will be factored into that loan.

Employee Retention Credit

• This fund provides up to $5,000 refundable credit per employee for suspended operations or 50% drop in receipts.
• This fund cannot be combined with a PPP loan.

Deferral of Payroll Taxes

• Employers can defer payment of the employers share of the Social Security taxes.
• Funding through this will be paid back over a 2-year period.

Economic Stabilization Fund

• Treasury-provided loans to nonprofit organizations with 500 – 10,000 employees.
• These loans may not be forgiven but the interest rate will be capped at 2% and payments will not be due for 6 months.

The webinar also included information about unemployment insurance, which will largely be available through individual states, and student loan assistance.

Those wishing to file for unemployment should do so on their respective state website. The Pandemic Unemployment Assistance (PUA) provides emergency unemployment assistance to workers who are not otherwise eligible to receive regular state unemployment insurance. Those who apply for and receive PUA are eligible for an additional $600 per week for up to four months on top of the standard state benefits. Anther program, the Pandemic Emergency Unemployment Compensation, provides those who are unemployed with 13 weeks of benefits after they have exhausted regular state unemployment benefits.

Students who are employed will benefit from the CARES Act as well, with student loan payments made by employers between March 27, 2020 through the end of the year are not taxable up to $5,250.00. However, students on a Public Service Loan Forgiveness program are not impacted by suspended interest loans.

Independent Sector will be hosting another webinar on COVID-19 relief to nonprofits on Thursday, April 9.