Dear Grantees,
Below is a summary of the
Paycheck Protection Program
(PPP)
that the Federal Government (
CARES ACT
) is providing to eligible 501(C)3 nonprofits during this critical time.
Paycheck Protection Program Overview
The Paycheck Protection Program is designed to provide a direct incentive for eligible small businesses or nonprofits to keep their workers on payroll by providing each small business or nonprofit a loan up to $10 million for payroll and certain other expenses.
The Paycheck Protection Program covers the period beginning February 15, 2020 and ending on June 30, 2020 (Covered Period).
If all employees (full-time or part-time) are kept on payroll for eight weeks, beginning on the date the
Paycheck Protection Loan
is funded (
Forgiveness Period
), the borrower will be eligible for forgiveness and cancellation of the loan for up to the full principle amount of the loan.
Lenders who are already authorized to make loans under the Small Business Administration’s (‘SBA’) existing loan program are automatically eligible to make Paycheck Protection Loans.
The lender (local bank) may charge a fee for processing the Paycheck Protection Loan.
To apply for the Paycheck Protection Loan, please contact your local bank to see if they are an approved SBA lender.
OUR #1 PIECE OF ADVICE ABOUT THESE PROGRAMS IS: APPLY AS SOON AS YOU CAN (APPLICATIONS OPEN TOMORROW, APRIL 3rd!)
Eligible Nonprofits
-- 501 (C)3 Nonprofit organizations with
not more
than
500 employees
.
Loan Amount/Interest Rate/Maturity/Repayment
- The loan amount is the lesser of:
- 2.5x average monthly payroll costs for the 1-year period prior to the loan date, or
- $10 million
- Payroll costs include: Salaries, healthcare and retirement benefits, state and local taxes on wages
- Payroll costs exclude: Compensation of individual employees in excess of $100,000 a year
- Interest rates borrowed for this program will be 1%
- Loan will have a maximum maturity date of 2 years
- Loan repayment will be deferred for 6 months, however, interest will continue to accrue during the 6 month deferment.
Authorized Use of Proceeds
*
- The proceeds from a Payroll Protection Loan may be used to pay for only the following items:
- Payroll costs: Employee salaries and wages, state employment taxes
- Costs related to group health care benefits during period of paid sick, medical or family leave
- Health insurance premiums
- Mortgage interest payments
- Rent
- Utilities
- Interest on any other debt incurred before the Covered period
*
At least 75% of the PPP loan proceeds shall be used for payroll costs.
Loan Forgiveness
**
- Loan amounts used for the following will be eligible for forgiveness:
- Payroll costs
- Interest on mortgage loans
- Rent
- Utilities
- The amount forgiven is based on the ratio of the number of employees during the period February 15, 2020 to June 30, 2020 to the number of employees employed during either (1) the period February 15, 2019 to June 30, 2019 OR (2) the period January 1, 2020 to February 29, 2020
- The amount of forgiveness is also reduced if the total salary or wages of any employee is reduced by more than 25 percent
**
For purposes of forgiveness, the borrower will have to document the proceeds used for payroll costs in order to determine the amount of forgiveness.
Please be advised that the CARES Act does offer other program assistance to nonprofits, like the
Economic Injury Disaster Loan
(‘EIDL’).
For the latest details and restrictions on the different Federal assistance programs available to nonprofits (501(C)3), please click on the
sba.gov
link.
To apply to either or both of these (Paycheck Protection Program and/or Economic Injury Disaster Loan), please contact your bank as to whether it is participating in these programs.
AGAIN, OUR #1 PIECE OF ADVICE ABOUT THESE PROGRAMS IS: APPLY AS SOON AS YOU CAN (APPLICATIONS OPEN TOMORROW, APRIL 3rd!)
This email is not meant to be financial or legal advice but just to make you aware of this government program.
If you have any further questions, please feel free to contact me at
rich@turrellfund.org
or call me
862.212.2255.
Please stay safe and well,
R
ich
