PPP Loans for Nonprofits
Nonprofits are not taking advantage of PPP loans in large numbers. Why? We know the following factors might be causing some nonprofits not to apply, and here are our reasons to reconsider:
- You or your board think it is too risky to take out a loan. Nonprofits are notoriously risk averse, and yes, loans can be dangerous within a solid repayment plan. However, in this case, 99% of PPP borrowers are receiving total forgiveness, and the process for PPP loan forgiveness for loan amounts under $150,000 has been streamlined and simplified. So, the risk is minimal.
- You think others may need it more than you do. You are not taking funding away from others when you secure a PPP loan. It is more likely that money will be left “on the table” at the end of March. Don’t let this reasoning stop you.
- You are daunted by the paperwork. Understandable, but let 501 Commons help you determine if you are eligible and assist you with the application and the forgiveness. You don’t have to become an expert in federal COVID relief to get a loan for your nonprofit.
- Your banker isn’t helpful. There are bankers ready to help, and in addition, the National Development Council has a fund specifically for PPP loans to nonprofits. Access this through 501 Commons or directly.
- You don’t have cashflow issues now. Okay, if you have all the cash you need and you are confident about your income lasting through the next few years of economic stress, maybe you don’t need the PPP. And, we’d love to know your secret! Just don’t turn down funding that might help you be more secure and help you retain some of your reserves for later use.
- You are not a 501c3 nonprofit. During this round, 501c6 organizations and some other types of nonprofits are now eligible, so be sure to double check if your organization can qualify.
- You already got one, and you think you aren’t eligible for a second PPP loan. Wrong! You are likely eligible for another PPP loan as long as you followed the rules on your first loan and can show a financial loss for at least one quarter from 2019 to 2020.
- You may not be eligible for second draw because you can’t show a financial loss for any quarter from 2019 to 2020. This might be true, since many of our donors have given generously to keep us going. However, make sure that you look carefully at each quarter versus the prior year—you only have to show a loss for a single quarter.
Please take a second look this week to see if you qualify for PPP loan support. PPP loans (first time and second draw) are available through March 31. Let’s not leave federal relief money on the table when it can be used to support our communities and retain our valued employees.
Do you know of someone else who needs to know this information? Please forward this message now!
Employee Retention Tax Credit – Another Source of Relief Funding
You may not have heard much yet about the Employee Retention Tax Credit (ERTC), another type of federal COVID relief. If you have staff and show a 20% reduction in revenue for one or more quarters in 2020 or 2021, you may be eligible for a credit to your payroll taxes of up to $5,000-$7,000 per employee per quarter through this program, which is relatively easy to access. Initially, this program could not be combined with PPP loan forgiveness, but now it can if you have additional payroll costs that were not covered by PPP.
To maximize your benefit, learn more about ERTC and your eligibility before you apply for PPP loan forgiveness. You may want to claim more non-payroll costs for PPP so that you have additional unreimbursed costs to apply to ERTC. You can learn more about this program by reading Nonprofits, Don’t Overlook Your Potential Refund Under the Employee Retention Tax Credit.
Key Resources to Learn More
- Free technical assistance from 501 Commons. The 501 Commons team can help with understanding eligibility, estimating what loan size you can apply for, finding a lender, and more. Email PPPLoans@501Commons.org.
- Free legal assistance through Communities Rise COVID legal clinics. Get help understanding federal assistance programs, navigating landlord/tenant issues, and more.
- Information and a “lender finder” available at smallbizhelpwa.org.