[vc_row gap=”20″ css=”.vc_custom_1585597321921{padding-bottom: 40px !important;}”][vc_column][vc_column_text]When the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed in March 2020 and nonprofit organizations were scrambling to determine how it would apply to them, Independent Sector teamed with Washington Council Ernst & Young, a DC-based lobbying firm with deep expertise in the nonprofit sector, and Sheppard Mullin, a national full-service law firm with a dedicated Nonprofit Team to develop this resource.
As Congress has passed additional relief legislation (most recently the American Rescue Plan Act), we continue to update it in order to help nonprofit organizations understand their options and how to proceed. This resource is categorized between assistance for individuals, small nonprofits (less than 500 employees) and large nonprofits (over 500 employees), and includes our latest information on eligibility criteria, timelines, and application information. [/vc_column_text][/vc_column][/vc_row][vc_row full_width=”stretch_row” css=”.vc_custom_1585785210528{padding-top: 40px !important;padding-bottom: 40px !important;background-color: #1c2a35 !important;}” el_class=”gowhite”][vc_column][vc_custom_heading text=”5 Important Tips” font_container=”tag:h2|text_align:center|color:%23ffffff” use_theme_fonts=”yes”][ultimate_carousel slides_on_desk=”1″ slides_on_tabs=”1″ slides_on_mob=”1″ autoplay=”off” arrow_style=”circle-border” arrow_border_color=”#ffffff” arrow_color=”#ffffff” arrow_size=”28″ dots_color=”#ffffff”][vc_column_text css=”.vc_custom_1608673517911{padding-right: 20px !important;padding-left: 20px !important;}”]
Top Priority for Organizations
Contact your bank. Nonprofits interested in the Paycheck Protection program should reach out to their primary banking partner as they are the agents administering the SBA programs.
SBA-approved lenders and other information centers in your local area can be found on the SBA’s website at https://www.sba.gov/local-assistance/find/.
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When in Doubt, File.
When in doubt if your organization qualifies for a loan program, file for relief and let the SBA decide if you qualify. There is no penalty for submitting an application, and the SBA is expected to take a broad approach to eligibility.
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Confirm State and Local Considerations
Different states and localities may have developed their own tax benefits or assistance programs.
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Remember Good Governance
Boards should be actively informed and engaged in steering their organizations through the many challenges presented by the COVID-19 crisis, consistent with their fiduciary duties.
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Other Relief
Additional relief and resources may be available based on a nonprofit organization’s type of operations, such as for healthcare organizations, food and shelter organizations, universities, arts and cultural institutions, as well as for organizations that have government contracts.
[/vc_column_text][/ultimate_carousel][/vc_column][/vc_row][vc_row full_width=”stretch_row” css=”.vc_custom_1585592595933{padding-top: 20px !important;padding-bottom: 20px !important;background-color: #1f93bc !important;}”][vc_column][vc_custom_heading text=”Navigate to Information About” font_container=”tag:h2|text_align:center|color:%23ffffff” use_theme_fonts=”yes”][vc_row_inner gap=”20″][vc_column_inner width=”1/3″][vc_btn title=”Individuals” style=”outline” shape=”square” color=”white” size=”lg” align=”center” i_icon_fontawesome=”fas fa-user-alt” button_block=”true” add_icon=”true” link=”url:%23individuals|||”][/vc_column_inner][vc_column_inner width=”1/3″][vc_btn title=”Small Nonprofits” style=”outline” shape=”square” color=”white” size=”lg” align=”center” i_icon_fontawesome=”fas fa-users” button_block=”true” add_icon=”true” link=”url:%23smallnonprofits|||”][/vc_column_inner][vc_column_inner width=”1/3″][vc_btn title=”Large Nonprofits” style=”outline” shape=”square” color=”white” size=”lg” align=”center” i_icon_fontawesome=”fas fa-globe” button_block=”true” add_icon=”true” link=”url:%23largenonprofits|||”][/vc_column_inner][/vc_row_inner][vc_row_inner gap=”20″][vc_column_inner][vc_btn title=”Frequently Asked Questions” style=”outline” shape=”square” color=”white” size=”lg” align=”center” i_icon_fontawesome=”fas fa-question-circle” button_block=”true” add_icon=”true” link=”url:%23faq|||”][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row css=”.vc_custom_1585592135617{padding-top: 40px !important;padding-bottom: 40px !important;}” el_id=”individuals”][vc_column][vc_custom_heading text=”Individuals” use_theme_fonts=”yes”][vc_column_text css=”.vc_custom_1585713018997{padding-top: 10px !important;padding-bottom: 10px !important;}”]Self-employed individuals should also explore the “Small Nonprofits” section, as they are eligible for a number of those opportunities.[/vc_column_text][vc_tta_accordion style=”modern” shape=”square” color=”white” active_section=”-1″ collapsible_all=”true”][vc_tta_section title=”Recovery Rebates (First Round – July 2020)” tab_id=”1585589103375-1ce64dd6-3241″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Each U.S. resident or citizen received up to $1,200 and an additional $500 for every child.
- This amount is reduced for higher-income taxpayers and begins phasing out after $75,000 in adjusted gross income for a single taxpayer, $112,500 for a head of household filer, and $150,000 for married couples who file a joint return
- Individuals must have a work-eligible SSN and must not be a dependent of another taxpayer
- Individuals with little to no income and those on federal benefits, such as Social Security, SSI, and veterans’ disability payments, are still eligible
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Application Information and Notes
[/vc_column_text][vc_column_text]Information about the first and second Economic Impact Payments is no longer available through the IRS’ “Get My Payment” tool. For information on these payments, view or create your online account. Also check your mail for IRS Notices 1444 and 1444-B. If you didn’t get the full amount of the first or second payment you were eligible for, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return, even if you aren’t required to file.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Recovery Rebates (Second Round – December 2020)” tab_id=”1608673931750-83281899-e88c”][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]The Consolidated Appropriations Act of 2021 provides a second round of relief payments for individuals up to $600 and an additional $600 for every qualifying child. Under the CARES Act, joint returns of couples where only one member of the couple had an SSN were ineligible for a rebate. For the second round of payments, families where only one parent has a valid SSN may also qualify for a partial rebate with respect to (1) the taxpayer or the taxpayer’s spouse whose valid SSN is included on the return and (2) any qualifying children whose valid SSN appears on the return. Because this change is retroactive, those who fall under this category who missed out on the first round of payments can claim that money when filing their 2020 tax returns.
- This amount will be reduced for higher-income taxpayers and begin phasing out after $75,000 in adjusted gross income for a single taxpayer, and $150,000 for married couples who file a joint return.
- The amount is completely phased-out after $87,000 for single taxpayers, $174,000 for a couple without children, and $198,000 for a family of four.
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Application Information and Notes
[/vc_column_text][vc_column_text]Information about the first and second Economic Impact Payments is no longer available through the IRS’ “Get My Payment” tool. For information on these payments, view or create your online account. Also check your mail for IRS Notices 1444 and 1444-B. If you didn’t get the full amount of the first or second payment you were eligible for, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return, even if you aren’t required to file.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Third Round of Recovery Rebates (March 2021)” tab_id=”1616697635861-80f49bab-51f3″][vc_row_inner][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]The American Rescue Plan Act, signed into law on March 11, 2021, provides a third round of relief payments for individuals up to $1,400 and an additional $1,400 for each dependent. Families will receive a payment for every dependent claimed on a tax return, not just qualifying children under the age of 17 as in prior rebates.
- This amount will be reduced for higher-income taxpayers and begin phasing out after $75,000 in adjusted gross income for a single taxpayer, and $150,000 for married couples who file a joint return.
- The amount is completely phased-out after $80,000 for single taxpayers and $160,000 for married couples.
[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]Application Information and Notes[/vc_column_text][vc_column_text]The IRS began making payments on March 12, 2021 with an official payment date of March 17. If the IRS has your direct deposit information, you will receive a payment that way. If it does not, you will receive your payment as a check or debit card in the mail. For more details and to check the timing of your payment, see the IRS’ Get My Payment information.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Unemployment Insurance” tab_id=”1585589595963-2407f0b8-bf04″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Unemployment Insurance under the CARES Act
- Pandemic unemployment assistance (PUA): Provides emergency unemployment assistance to workers left out of the regular state unemployment insurance or who have exhausted their state unemployment benefits. A “Covered Individual” is eligible for up to 39 weeks (including any weeks for which the individual received regular unemployment benefits).
- A “Covered Individual” is an individual who (i) is not otherwise eligible for regular or unemployment compensation; (ii) provides self-certification that the individual is unemployed, or partially unemployed, for various reasons related to COVID-19
- Expands eligibility for unemployment to self-employed, part time workers who are unable to work due to COVID-19, and those with limited work history.
- Emergency Increase to Unemployment Compensation (Pandemic Unemployment Compensation or PUC): Individuals eligible for state unemployment benefits or PUA were eligible for an extra $600 per week, since reduced to $300 per week.
- Pandemic Emergency Unemployment Compensation (PEUC): Provided extra weeks of unemployment benefits after exhausting state unemployment benefits. All but eight states offer 26 weeks of unemployment. To be eligible, workers must be actively engaged in looking for work, but states must provide flexibility in meeting this requirement when individuals are unable to look for work because of COVID-19.
- Funds the cost of the first week of benefits if a state waives its standard one-week waiting period requirement.
- Establishes a new short-term compensation plan where employers can reduce hours instead of layoffs, and employees can receive pro-rated unemployment benefits.
- Funds 50% of the reimbursement of unemployment benefits for workers of nonprofits that have elected the reimbursement method for unemployment insurance coverage, sometimes known as self-insurance.
Extension of Unemployment Benefits under the American Rescue Plan Act
The American Rescue Plan Act, signed into law on March 11, 2021, temporarily extends the unemployment programs created by the CARES Act (and extended by the Consolidated Appropriations Act of 2021).
- Extends the Pandemic Unemployment Assistance (PUA) program through September 6, 2021. Individuals eligible for state unemployment benefits or PUA will continue to receive an additional $300 per week. This was originally an extra $600 under the CARES Act.
- Extends the Pandemic Emergency Unemployment Compensation (PEUC) program through September 6, 2021 by providing additional weeks of federally-funded benefits to workers who have exhausted their regular state unemployment benefits and increases the weeks of PEUC benefits an individual may claim from 24 to 53 weeks.
- Extends the short-term compensation plan and federal funding for states that waive waiting weeks – as created by the CARES Act – through September 6, 2021.
- Individuals receiving UI benefits will not be taxed on the first $10,200 of UI benefits for households with incomes below $150,000 for tax year 2020.
- Extends the subsidy for costs incurred by employers who provide unemployment benefits on a reimbursable basis, rather than via tax contributions, through September 6, 2021. Increases the subsidy from 50% to 75% for weeks beginning after March 31, 2021.
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Application Information and Notes
[/vc_column_text][vc_column_text]Unemployment claims must be filed in the state where you worked. To find information on your state, visit CareerOneStop. Individuals should gather his/her income and documentation regarding their work situation. Individuals will need to provide a social security number, home address, telephone number, email address, banks name, address, account number and routing number for direct deposit, your employer’s name, address and phone number, first and last day worked, reason for leaving, and any pension or severance package information. Individuals should file online as soon as possible.
For general questions on unemployment insurance, visit the Department of Labor’s page.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”$300 Universal Charitable Deduction” tab_id=”1585589667067-7d79bc3e-2f42″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Permits individuals to deduct up to $300 of cash contributions to most charities in 2020 for those who do not itemize their deductions.
The Consolidated Appropriations Act of 2021 extended and increased the universal charitable deduction for contributions made in 2021 and provides a deduction of up to $600 for taxpayers filing a joint tax return.[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]
Application Information and Notes
[/vc_column_text][vc_column_text]Available for the 2020 and 2021 tax year.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Changes to limitations on charitable contributions” tab_id=”1585589713933-f89162e7-22bb”][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Suspends the adjusted gross income limitation on deductions for cash contributions to most charities for individuals who itemize. Increases the limitation on deductions for similar contributions by corporations from 10% to 25% of taxable income. Also increases the limitation on deductions from 15% to 25% for contributions of food inventory. The Consolidated Appropriations Act of 2021 extended the above adjusted gross income limitations through tax year 2021.[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]
Application Information and Notes
[/vc_column_text][vc_column_text]Available for the 2020 and 2021 tax years.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Employer student loan repayments” tab_id=”1585589751927-c351b52f-d381″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Individuals who receive student loan repayment benefits through their employers can temporarily exclude up to $5,250 from taxable income. This applies to student loan payments made by an employer on behalf of an employee after March 27, 2020 and through December 31, 2025.
Public Service Loan Forgiveness (PSLF): The CARES Act included several other provisions relating to student loans, including an interest- free suspension of payments due on certain federal loans until September 30, 2020.This suspension has been extended administratively through September 30, 2021.The payment suspension will not affect PSLF for individuals who continue to be employed full time at a qualifying employer during the suspension, because for each month the loan is suspended or paid (either by the individual or by the employer on behalf of the individual), the individual is treated as having made the payment for purposes of the PSLF.
If an individual makes a payment, it will reduce the principal of the loan. See more information from the Department of Education.
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Application Information and Notes
[/vc_column_text][vc_column_text]Applies to any student loan payments made by an employer on behalf of an employee after March 27, 2020. No application required. 2020 IRS Form W-2 should exclude the payments from taxable income. Nonprofits should review and amend any education assistance program documents to the extent they want to include this benefit.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][/vc_tta_accordion][/vc_column][/vc_row][vc_row el_id=”smallnonprofits” css=”.vc_custom_1585592307919{padding-top: 40px !important;padding-bottom: 40px !important;}”][vc_column][vc_custom_heading text=”Small Nonprofits (Fewer than 500 Employees per Location)” use_theme_fonts=”yes”][vc_tta_accordion style=”modern” shape=”square” color=”white” active_section=”-1″ collapsible_all=”true”][vc_tta_section title=”Small Business Administration (SBA) loans and loan forgiveness” tab_id=”1585589824306-71fb5681-53a5″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
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- Applies to most nonprofits other than Section 501(c)(4) organizations, as modified by the American Rescue Plan Act
- Applies to these nonprofits that employ not more than 500 employees per physical location, as updated by the American Rescue Plan Act of 2021
- The loan is for expenses for payroll costs, health benefits during sick or family leave, salaries or commissions, interest on mortgage, rent, utilities and prior debt (updated by the Paycheck Protection Program Flexibility Act on June 5, 2020)
- The size of the loan is the lesser of (1) a nonprofit’s average monthly “payroll costs” for the prior 12 months times 2.5 or (2) $10 million
- Payroll costs include salary, wages, sick leave (unless allowed for paid leave tax credit), health benefits, pension benefits, and state taxes (Payments for salary and wages limited to $100,000). Independent contractors do not count as employees for this calculation.
- Loans issued prior to June 5, 2020 have a maturity of 2 years. Loans issued after June 5, 2020 have a maturity of 5 years. All PPP loans have an interest rate of 1%
- Loans are provided via existing SBA lenders and other lenders approved by the SBA
- Nonprofits are eligible to have these loans forgiven, effectively turning the loans into grants. Forgiveness is available for the portion of the loan used for the following expenses during the covered period (24 weeks from origination)
- Payroll costs (as defined above)
- Interest on mortgage incurred before February 15, 2020
- Rent obligation incurred before February 15, 2020 and
- Utilities (electric, gas, water, transportation, phone, internet) for service that began before February 15, 2020
- At least 60% of loan proceeds must go toward payroll costs in order for the full loan to be forgiven (updated by the PPP Flexibility Act)
- The amount forgiven will be reduced
- Proportionally by any reduction in employees retained compared to the prior year, and
- By the reduction in pay of any employee beyond 25% of their prior year compensation
- To encourage employers to rehire any employees who have already been laid off due to COVID-19, borrowers that rehire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
Additional Paycheck Protection Relief
The Consolidated Appropriations Act of 2021 provided funds for additional loans under the PPP and extended the program through May 31, 2021, and the American Rescue Plan Act of 2021 provided further additional funds and expanded eligibility for nonprofits.
- Provides a second PPP forgivable loan for small businesses and nonprofits with 300 or fewer employees (per physical location, as amended by the American Rescue Plan Act) and that can demonstrate a loss of 25% of gross receipts (based on section 6033 reporting definitions) of any quarter during 2020 when compared to the same quarter in 2019
- Creates a dedicated $15 billion set-aside for lending through community financial institutions, including Community Development Financial Institutions and Minority Depository Institutions to increase access for minority-owned and other underserved small businesses and nonprofits
- Creates a set-aside for very small businesses and nonprofits with 10 or fewer employees and for small businesses located in distressed areas
- Expands PPP eligibility to include 501(c)(6) nonprofits, including tourism promotion organizations and local chambers of commerce
- Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses
- Repeals the requirement of deducting an EIDL Advance from the PPP forgiveness amount
- Increases the total program level to $813.7 billion
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Application Information and Notes
[/vc_column_text][vc_column_text]Nonprofits may apply at any lending institution that is approved to participate in the program through the existing SBA 7(a) lending program and additional lenders approved by SBA and the Department of Treasury. Nonprofits do not need to visit any government institution to apply for the program, and should complete the updated PPP first draw and PPP second draw applications as appropriate.
- For more details on applying for the program and seeking loan forgiveness, see the SBA’s Paycheck Protection Program landing page.
- See the interim final rule issued March 18, 2021 and a list of frequently asked questions posted by SBA and Treasury, including more details on application procedures and calculating payroll costs.
For information on finding SBA-approved lenders, visit SBA’s online Lender Match tool, your local Small Business Development Center, or local Women’s Business Center.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Emergency Economic Injury Disaster Loans (EIDL) Grants” tab_id=”1585589824856-0879fadc-9a69″][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]SBA EIDL loans are low-interest loans provided through the SBA disaster loan program to help businesses and homeowners recover from declared disasters. The CARES Act expands eligibility for access to EIDL loans and provides upfront grants.
- Establishes an emergency grant to allow an eligible nonprofit that has applied for an EIDL loan due to COVID-19 to request an advance on that loan, up to $10,000.
- Applicants are not required to repay advance payments, even if denied for an EIDL loan, but advanced payments would be counted towards the loan forgiveness amount under a 7(a) PPP loan
- Funds can be used for payroll costs, materials, rent, mortgage or other debt payments
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Application Information and Notes
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- To apply for an EIDL loan, visit the SBA’s COVID-19 Economic Injury Disaster Loan Application.
- For more information on accessing a Targeted EIDL Advance, see SBA’s Targeted EIDL Advance FAQs.
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Eligibility Requirements
[/vc_column_text][vc_column_text]Employee Retention Credit under the CARES Act
Eligibility Requirements:
In 2020, Provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis.
- The credit is available to employers (1) who were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) where gross receipts declined by more than 50% when compared to the same quarter in the prior year
- The total wages attributed to an employee is capped at $10,000, including health benefits, resulting in a maximum credit of $5,000 per employee
- Eligible wages include
- For employers with greater than 100 full-time employees, wages paid to employees when they are not providing services due to COVID-19
- For employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order
- Applies only to wages paid after March 12, 2020 and before January 1, 2021. Salaries that are paid using a forgiven PPP loan are not eligible for the credit.
Extension and Expansion of the ERC
The Consolidated Appropriations Act of 2021 extended the ERC established under the CARES Act through July 1, 2021.
- Increases the credit rate from 50% to 70%
- Raises the limit on per-employee creditable wages from $10,000 for the year, to $10,000 for each quarter
- Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%
- Modifies the threshold for treatment as a “large employer” by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees
- Clarifies the definition of gross receipts for nonprofit employers based on section 6033 definitions
- Retroactively provides that employers who receive a PPP loan may still qualify for the ERC with respect to wages that are not paid for with forgiven PPP loan proceeds.
The American Rescue Plan Act, signed into law on March 11, 2021, extends the ERC (as expanded) through December 31, 2021. It also allows the hardest hit organizations to count all wages paid as qualifying wages, not just wages paid to employees not providing services.[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]
Application Information and Notes
[/vc_column_text][vc_column_text]The IRS has issued March 1, 2021 guidance on the ERC applying only to calendar quarters in 2020. Further guidance on the expanded version of the ERC is anticipated. Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][/vc_tta_accordion][/vc_column][/vc_row][vc_row css=”.vc_custom_1585593228007{padding-top: 40px !important;padding-bottom: 40px !important;}” el_id=”largenonprofits”][vc_column][vc_custom_heading text=”Large Nonprofits (More than 500 Employees)” use_theme_fonts=”yes”][vc_tta_accordion style=”modern” shape=”square” color=”white” active_section=”-1″ collapsible_all=”true”][vc_tta_section title=”Employee Retention Credit” tab_id=”1585590214150-c82c9f9c-3dbe”][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]Employee Retention Credit under the CARES Act
Eligibility Requirements:
In 2020, Provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis.
- The credit is available to employers (1) who were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) where gross receipts declined by more than 50% when compared to the same quarter in the prior year
- The total wages attributed to an employee is capped at $10,000, including health benefits, resulting in a maximum credit of $5,000 per employee
- Eligible wages include
- For employers with greater than 100 full-time employees, wages paid to employees when they are not providing services due to COVID-19
- For employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order
- Applies only to wages paid after March 12, 2020 and before January 1, 2021. Salaries that are paid using a forgiven PPP loan are not eligible for the credit.
Extension and Expansion of the ERC
The Consolidated Appropriations Act of 2021 extended the ERC established under the CARES Act through July 1, 2021.
- Increases the credit rate from 50% to 70%
- Raises the limit on per-employee creditable wages from $10,000 for the year, to $10,000 for each quarter
- Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%
- Modifies the threshold for treatment as a “large employer” by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees
- Clarifies the definition of gross receipts for nonprofit employers based on section 6033 definitions
- Retroactively provides that employers who receive a PPP loan may still qualify for the ERC with respect to wages that are not paid for with forgiven PPP loan proceeds.
The American Rescue Plan Act, signed into law on March 11, 2021, extends the ERC (as expanded) through December 31, 2021. It also allows the hardest hit organizations to count all wages paid as qualifying wages, not just wages paid to employees not providing services.[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]
Application Information and Notes
[/vc_column_text][vc_column_text]The IRS has issued March 1, 2021 guidance on the ERC applying only to calendar quarters in 2020. Further guidance on the expanded version of the ERC is anticipated. Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Emergency Economic Injury Disaster Loans (EIDL) Grants” tab_id=”1585590213339-b3cafd84-a2cd”][vc_row_inner gap=”30″][vc_column_inner width=”1/2″][vc_column_text]
Eligibility Requirements
[/vc_column_text][vc_column_text]SBA EIDL loans are low-interest loans provided through the SBA disaster loan program to help businesses and homeowners recover from declared disasters. The CARES Act expands eligibility for access to EIDL loans and provides upfront grants.
- Establishes an emergency grant to allow an eligible nonprofit that has applied for an EIDL loan due to COVID-19 to request an advance on that loan, up to $10,000.
- Applicants are not required to repay advance payments, even if denied for an EIDL loan, but advanced payments would be counted towards the loan forgiveness amount under a 7(a) PPP loan
- Funds can be used for payroll costs, materials, rent, mortgage or other debt payments
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Application Information and Notes
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- To apply for an EIDL loan, visit the SBA’s COVID-19 Economic Injury Disaster Loan Application.
- For more information on accessing a Targeted EIDL Advance, see SBA’s Targeted EIDL Advance FAQs.
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][/vc_tta_accordion][/vc_column][/vc_row][vc_row full_width=”stretch_row” bg_type=”bg_color” css=”.vc_custom_1586218631592{padding-top: 60px !important;padding-bottom: 60px !important;}” el_id=”faq” bg_color_value=”#1f93bc”][vc_column][vc_custom_heading text=”Top 9 Questions about Relief for Nonprofits under the CARES Act” font_container=”tag:h2|text_align:left|color:%23ffffff” use_theme_fonts=”yes”][vc_column_text el_class=”gowhite”]Independent Sector’s members and partners have been asking many questions about the relief programs available under the federal American Rescue Plan Act and previous legislation. In addition to the information above, here are answers to questions we are frequently being asked – and important points that we are seeing that may not be getting enough attention.[/vc_column_text][vc_tta_accordion style=”modern” shape=”square” color=”white” spacing=”20″ active_section=”-1″ collapsible_all=”true”][vc_tta_section title=”What are the most important things I should know?” tab_id=”1586216919227-df99d681-22c3″][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]
- It is critical to apply quickly for loan funds, and to start with your current bank.
- While you can accept only one loan, you can apply through multiple banks. Some banks have had higher acceptance rates for PPP loans.
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Where do I apply for the federal loan programs?” tab_id=”1586217264883-13882b96-556c”][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Paycheck Protection Program (PPP) forgivable loans: Apply at any federally insured bank, credit union or other lender approved by the Small Business Administration (SBA). The application forms and additional information are available at https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program.
Economic Injury Disaster Loans (EIDL) & Grants: Apply directly to the SBA.
Each relief program applies to a certain category of organizations, in addition to other eligibility criteria:
- Paycheck Protection Program Forgivable Loans (SBA 7(a)): Section 501(c)(3) tax-exempt organizations, Section 501(c)(19) tax-exempt veterans’ organizations, certain Section 501(c)(6) organizations, and Tribal small business concerns with not more than 500 employees. Organizations meeting the requirements of an “additional covered nonprofit entity” also qualify. These include any nonprofit that is NOT listed in sections above or in 501(c)(4), receives and spends less than 15% of its receipts and expenses on lobbying, spends less than $1 million on lobbying, and employs not more than 300 employees.
- Expanded Economic Injury Disaster Loans (EIDL) & Emergency Grants (SBA 7(b)): “private nonprofit organizations” with not more than 500 employees. This term has not been clearly defined. However, the SBA has recognized in the past that food kitchens, homeless shelters, museums, libraries, community centers, schools and colleges qualified.
- Payroll Taxes Credit for Employee Retention: All employers, including nonprofits.
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Which types of relief program preclude my organization from receiving other benefits?” tab_id=”1586217390969-31c99f14-6f8f”][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Paycheck Protection Program & EIDL? An employer can apply for and receive both a Paycheck Protection Program and EIDL loan, but the funds obtained cannot be used for the same purpose. Employers who previously obtained an EIDL loan may refinance their EIDL loan into a Paycheck Protection Program loan, which is eligible for forgiveness. Employers that apply for EIDL loans may also receive a grant advance of up to $10,000 within 3 days of application, which may be kept regardless of whether your application is approved.
Paycheck Protection Program & Employee Retention Credit? An employer that receives a loan under the SBA 7(a) Paycheck Protection Program is not eligible to claim the employee retention credit for wages paid with forgiven PPP loan proceeds.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”How do I determine my organization’s number of employees and payroll costs for PPP eligibility?” tab_id=”1586217596924-a364a984-1502″][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Applicable dates: In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application.
Affiliated entities and Employee Count: Employees of any affiliate or subsidiary of a nonprofit must be included in the number of employees when determining eligibility. An affiliate for this purpose is any entity that controls or has the power to control the other, or that is controlled by the same third party, regardless of “for profit” status (i.e., including for-profit subsidiaries and affiliates of nonprofit organizations). For the purposes of PPP first and second draw eligibility, the number of employees is determined per physical location.
Faith-Based Organizations: The SBA issued FAQs exempting many faith-based organizations from the affiliation rules used to count an organization’s number of employees.
Common misconception: The Paycheck Protection Program application form requires reporting owners of 20% or more of the applicant, including their Social Security Numbers. Nonprofits do not have owners and therefore would not fill out that section of the form.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”Which programs require that my organization have experienced “economic injury“?” tab_id=”1586218203256-9ef0430d-859d”][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Paycheck Protection Program initial loans require the applicant to certify that the current economic uncertainty makes the Paycheck Protection Program loan necessary to support the organization’s ongoing operations. There is no requirement to affirmatively show current or future economic hardship or injury. PPP second draw loans require a demonstrated decline in quarterly revenue (compared to the same quarter in 2019) of at least 25 percent.
EIDL loans require that an applicant show “substantial economic injury” as a result of COVID-19, which means the organization cannot meet its obligations and pay necessary and ordinary expenses.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”What documents do I need to apply for loans?” tab_id=”1586218282163-3daca948-f6b5″][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]
Independent Sector has put together a list of suggested documents, although each financial institution may have its own particular requirements.
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”When can I realistically expect to receive the funds?” tab_id=”1586218317884-5f492762-3a7b”][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Applicants can expect to receive loan proceeds within 10 days of being approved for a Paycheck Protection Program loan. The length of time to receive approval largely depends on the specific institution through which you apply. Once a completed application is submitted, applicants are typically approved anywhere between 3-10 business days.
Feedback from banks and others tasked with administering these programs is that difficulties in processing applications occurred from time to time and may continue to occur. To ensure that an application has the best chances of being approved, it is imperative that the applicant submit a complete application with all supporting documentation to their lender.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][vc_tta_section title=”What other sources of assistance can my organization seek?” tab_id=”1586218431782-b197bef1-1882″][vc_row_inner gap=”30″][vc_column_inner][vc_column_text]Check for other federal relief: Additional relief and resources are available for certain nonprofits based on their type of operations, such as for healthcare organizations, universities, food banks, and arts and cultural organizations, as well as for organizations that have government contracts.
Check for other valuable sources of relief: State and local governments are providing additional aid in the forms of grants and loans, and many private foundations and other philanthropic organizations are funding COVID-19 relief funds, including funds focused on specific geographic areas.
- A state-by-state list of community foundations and more grantmakers offering relief funds is available from the Council on Foundations.
- Obtaining relief from these sources may be faster in some cases than obtaining loans under the federal relief programs. However, there is no double dipping – organizations cannot have the same expenses reimbursed from multiple sources.
Stay tuned: Things are changing at breakneck speed, as government agencies scramble to issue guidance (and sometimes, to change previously issued guidance). Please continue to check back here for updates.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_tta_section][/vc_tta_accordion][vc_column_text el_class=”gowhite”]With special thanks to Tamar Rosenberg, Adam Barton and Claudia Hinsch of Sheppard Mullin’s Nonprofit Team for assistance with the FAQ’s.
The information here is a high level summary of complex law. It is provided for informational purposes only. It is not intended to be, and is not a substitute for, legal or financial advice. Organizations should consult their attorneys and advisors for specific guidance.
Things are changing quickly. Additional guidance and application materials are expected. This information represents our interpretation of where things currently stand at the time of drafting.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1585594077736{padding-top: 40px !important;padding-bottom: 40px !important;}”][vc_column][vc_custom_heading text=”Additional Resources” use_theme_fonts=”yes”][vc_column_text]
- Independent Sector on COVID-19
- Independent Sector Summary of CARES Act Provisions for Nonprofits
- Coronavirus.gov
- Treasury on COVID-19
- CDC on COVID-19
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_message style=”square” message_box_color=”blue”]If you have any question, please email publicpolicy@independentsector.org.[/vc_message][/vc_column][/vc_row][vc_row][vc_column][vc_empty_space height=”60px”][/vc_column][/vc_row]
