Update: CARES ACT
April 16, 2020
Applications for the Payroll Protection Program (PPP) and Expanded Econimic Injury Disaster Loans (EIDL) under the CARES Act are no longer being accepted, due to a lapse in funding. Applications that have already been received will still be considered on a first come, first served basis. See the US Small Business Administration website for more information.
Update: CARES ACT
April 6, 2020
By now, we imagine you are all aware of the new loans and tax credits available as part of the CARES Act. There are 2 types of loans: Payroll Protection Program (PPP) and Expanded Economic Injury Disaster (EIDL). You may not apply for both, but if you have an existing EIDL loan, you may roll it into a PPP loan. The tax credit may only be applied for if you do not receive either of these two loans. We have included some guidance here and if you have any questions, please do not hesitate to reach out to Alexis Colker at firstname.lastname@example.org or 919.956.9124, ext. 203. The information from the federal government is constantly changing, and this guidance is current as of today, April 6, 2020, but is subject to change.
CARES Act Loan Chart - produced by the National Council of Nonprofits eligible nonprofits choices for securing cash needed to maintain staff and operations.
TAX ADVICE ON REFUNDABLE PAYROLL TAX CREDITS
The IRS posted an explanation of the refundable tax credits available to small and midsize businesses that are required to provide paid leave. The explanations, arranged in a helpful Q&A format, clarify common areas of confusion. VIEW FAQ.
Both loans will cover payroll for staff, but if a majority of staff salaries are paid for by grant funds, it is important to make sure you are not supplanting.
Borrowers must complete the PPP application through a commercial lender. It is best to reach out the bank that you currently use. You can find a sample form here SBA Form 2483 (Paycheck Protection Program Application Form) but each lender will have their own online portal and application.
Payroll Costs Defined
As defined by SBA: “Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.”
Calculating Payroll Costs
The rule lays out a five-step process for calculating payroll costs for purposes of PPP loans:
- Aggregate payroll costs (see above) for last 12-months;
- Subtract pay from each employee in excess of $100,000;
- Divide step 2 total by 12 months to get the monthly average;
- Multiply step 3 total by 2.5; and then
- Add any outstanding amount from an EIDL loan received between 1/31/2020 and 4/3/2020, “less the amount of any ‘advance’ under an EIDL COVID-19 loan (because it doesn’t have to be repaid).
Update: SBA loans for nonprofits
April 3, 2020
The application for the CARES Act loans opens TODAY, 4/3, and agencies apply through their banks. Here is a flyer with information about the CARES Act loan options for nonprofits. There are two options, and you cannot apply for both:
1) Payment Protection Loan
2) Economic Injury Disaster Loan
Agencies cannot use these loans to supplant your grant funds. The loans may be partially or fully forgivable, but NCCADV has been advised by the National Network to End Domestic Violence that this will be very competitive. They anticipate only about 25% of the loan will be forgiven.