Loans Available for Nonprofits in the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act CARES Act (Public Law 116-136) defined a number of programs that charitable nonprofits will be eligible to apply for. The chart that follows provides information on those loan options, eligibility criteria, terms, and application information. This chart is neither financial nor legal advice for any specific organization. It is an analysis of the new law before any rules or regulations.

For more details about these loan programs, view the recording of the National Council of Nonprofits' webinar from March 31, "Federal Coronavirus Relief Bills: What Do They Mean for Nonprofits?

Note: The information provided on this website does not, and is not intended to, constitute legal advice, and rather is for general information purposes only. It is an analysis of the new law before any rules or regulations. Special thanks to the National Council of Nonprofits.


Paycheck Protection Program (Emergency SBA 7(a) Loans)

Secs. 1102, 1106

Expanded EIDL & Emergency Grants (SBA 7(b) Loans)

Sec. 1110 

Mid-Size Loan Program

Sec. 4003
Description Emergency loan program for nonprofits and for-profit entities to secure funds to pay staff and operating costs for two months, and secure full loan forgiveness under certain circumstances. Existing Economic Injury Disaster Loan (EIDL) program expanded to more for-profit entities, applies looser credit standards, and creates a rapid grant procedure.  Largely undefined loan program to be created by the Treasury Department to fill the gap between the Paycheck Protection Program for smaller employers and the industry stabilization loans to big business.
Size Eligibility 500 or fewer employees Existing EIDL limits for nonprofits* Between 500 and 10,000 employees
Dollar Amount The lesser of $10 million or 2.5 times the average total monthly payroll costs from the one-year period (look back) prior to the date of application. Express 7(a) loans available up to $1 million. Normal EIDL loans available up to $2 million.
EIDL advances of $10,000 paid within 3 days.
Loan Processor Local financial institutions Small Business Administration Local financial institutions
Nonprofit Eligibility Must have been in operation on 2/15/2020 and had paid employees and/or paid independent contractors. Expressly available for charitable nonprofits with 500 or fewer employees, but requires that employees of affiliated nonprofits may be counted toward the 500 employee cap, depending on the degree of control of the parent. In operation before 1/31/2020. Loans can be based solely on credit score.

Existing EIDL program applies to “private nonprofit organizations” that excludes religious institutions and some other charitable organizations.
Expressly applies to “nonprofit organizations”
Personal Guarantee No collateral or personal guarantee required. Waives personal guarantee up to $200,000, and requirement of inability to obtain credit elsewhere. Unspecified
Certification Good-faith certification that need for the loan is based on economic conditions; funds to be used to retain workers and maintain payroll or make mortgage, lease, and utility payments; and no duplicate application or receipt of funds for same purposes. Self-certification under penalty of perjury.  Good-faith certification that need is based on economic conditions; funds to be used to retain and restore employment, won’t abrogate collective bargaining agreements, and will remain neutral in union organizing efforts, among other things.
Loan Use Payroll costs, mortgage interest payments, rent, utilities, and interest on prior debt during the 8-week period following loan origination. $10,000 advance: Paid sick leave, meeting payroll, increased costs due to disrupted supply chain, mortgage, debt service. To retain 90% of workforce at full wages and benefits through 9/30/2020 and intention to restore 90% of workforce in place on 2/1/2020.
Loan Terms 4% interest rate; first 6 months of payments (principal and interest) automatically deferred. Maximum of 10 years. Normal EIDL: 2.75% interest rate for nonprofits

$10,000 advance treated as a grant
Interest capped at 2% with no principle or interest paid for first 6 months.
Loan Forgiveness Employers that maintain employment for the 8 weeks after origination of loan, or rehire employees by June 30, will have loans forgiven in whole or part, essentially turning the loan into a grant. Section 1106. $10,000 advance forgiven even if borrower denied EIDL loans. Expressly prohibited in statute. Section 4003(d)(3))
Key Definitions Covered Period means the 8-week period following loan origination.

Employee means an individual working on a full-time, part-time, or other basis.

Payroll Costs include compensation (including benefits costs) paid to employees and contractors, capped at $100,000 per year per individual (prorated over the “covered” period), and state/local payroll taxes. 
Covered Period means 1/31/2020 through 12/31/2020.

Eligible entity means a business with 500 or fewer employees.

*Eligible private nonprofits include, without limitation, nursing homes, food kitchens, educational facilities, senior citizen centers, daycare centers, playhouses, and shelters, among others.
Applications & Documentation SBA Instructions and sample application (posted 3/31/2020) For emergency EIDL Grant, apply here now.

For emergency EIDL Grant, apply here now.

For normal EIDL loans, complete SBA Form 5 online.

UPDATE - APRIL 16, 2020: SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. 

Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

 To be announced