The Coronavirus Aid, Relief, and Economic Security (CARES) Act has some key provisions which may offer certain nonprofits the emergency funding needed to continue operations during this time of economic uncertainty.
Paycheck Protection Program provides loans through the Small Business Administration (SBA) that may fund payroll costs and occupancy costs such as mortgage interest payments, rent and utility expenses. To be eligible, the nonprofit must be a 501(c)(3) nonprofit with 500 or fewer employees and have been in operation on 2/15/2020. These loans do not require collateral or personal guarantees that are typically required of SBA loans. As the intent of these loans is to keep employees working, these loans may be fully or partially forgiven if certain criteria are met. Applications are now being accepted for these loans by various lending institutions. It is best to contact your banker for further guidance. ACT NOW as these loans are first come, first serve and the available funding is expected to be fully committed rather quickly.
To learn more about the PPP Loan or to find a lender visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
Economic Injury Disaster Loan Program provides loans through the SBA with more relaxed credit standards and a $10,000 advance to cover payroll, paid sick leave, and mortgage and interest payments. Eligible nonprofits are certain “private nonprofit organizations” and must have 500 or fewer employees and been in operation before 1/31/2020. Contact the SBA to apply for the emergency EIDL $10,000 grant and submit a loan application.
To learn more about the EIDL or to apply online visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance.
EMPLOYEE RETENTION PAYROLL TAX CREDIT
Nonprofits whose operations were fully or partially suspended due to orders from a governmental authority or have experienced a 50% decline in gross receipts may receive a credit against employment taxes equal to 50% of qualified wages paid to employees who are not working up to $10,000 per employee. Important to note that this employee retention payroll tax credit is not available if your organization obtained a loan through the Paycheck Protection Program.
DELAYED PAYMENT OF EMPLOYER PAYROLL TAXES
The employer share of the Social Security portion of the FICA taxes that are due from March 27, 2020 through December 31, 2020 may be deferred. Half of the deferred payroll taxes would be due December 31, 2021 and the remainder half would be due December 31, 2022. Important to note that if your organization has a loan through the Paycheck Protection Program that is forgiven, the payroll tax deferral is not available.
SELF-FUNDED NONPROFITS AND UNEMPLOYMENT
If your nonprofit organization has elected to self-insure rather than pay state unemployment taxes, the CARES Act includes funding to states for them to reimburse your organization for 50% of the costs incurred to pay for unemployment benefits through December 31, 2020 as result of the pandemic.
CHARITABLE GIVING INCENTIVE
All donors who make charitable donations during 2020 will receive a new “above-the-line” deduction for total cash charitable contributions up to $300. For donors who itemize their deductions, the CARES Act also increases the cap on annual contributions allowed to be deducted to 100% of adjusted gross income.
The COVID-19 pandemic has affected every nonprofit organization in some way. Please contact us by replying to this email or by calling 239-939-2233 if you would like to discuss these provisions of the CARES Act or if we can help you through these unprecedented times.