SBA loans for nonprofits

The federal government regularly revises the details of these programs as the coronavirus outbreak affects more businesses. We’ll update this page regularly as new information unfolds.

The Coronavirus Aid, Relief and Economic Security (CARES) Act opened up eligibility for SBA loans to more businesses, including nonprofits. But there are still restrictions on who can qualify. And you’ll be competing with thousands of businesses for a limited amount of funds.

Lendio Paycheck Protection Loan

Cover your payroll with a 1% APR Paycheck Protection Loan — and get up to 100% forgiven. Apply ASAP before funds run out.

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Requirements	Documented payroll costs — like 1099s and W2s In business since at least Feb. 15, 2020 To qualify for forgiveness, must use funds for payroll, existing mortage interest payments, rent, leases and utilities

Which SBA loans can nonprofits qualify for?

Nonprofits can qualify for SBA loan programs that are meant to help small businesses struggling during the coronavirus outbreak, thanks to the CARES Act. These include the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Program.

Paycheck Protection Program loans

The PPP is a low-interest incentive program to encourage small business owners to keep staff on payroll during the coronavirus outbreak. You can get a loan of up to $10 million based on your payroll expenses, at a 1% interest rate, with payments deferred for six months — though interest accrues during this time.

After eight weeks, you can apply to have up to 100% of your payroll costs during that period forgiven — plus 25% to cover other operating costs. But you need to rehire laid-off employees and keep everyone on the same salary to qualify for full forgiveness. You’re responsible for paying off any remaining balance over two years.

How to apply

You can apply for a Paycheck Protection Loan through an SBA 7(a) lender, federally insured bank or credit union, or a farm credit agency. The SBA is also working to approve other lenders to offer this loan.

Generally, applicants have had better luck applying with a bank they already have a relationship with — especially as a borrower.

Economic Injury Disaster Loans

The SBA Economic Injury Disaster Loan Program offers loans up to $2 million based on your operating expenses at 2.75% interest for nonprofits. You can also apply for an advance of up to $10,000 that you don’t have to repay. Terms can stretch as long as 30 years, depending on your organization’s ability to repay.

While disaster loans are meant to cover more operating expenses than the Paycheck Protection Program, it might not be sufficient. Some applicants have received notices saying the SBA is only offering up to a total of $25,000 in funding, including the advance. It’s recommended that you also apply for a Paycheck Protection Loan as well.

How to apply

You can apply for an Economic Injury Disaster Loan by filling out a short application on the SBA disaster loan website. These loans are only available directly through the SBA — you can’t apply through a bank or other lender.

Generally, it can take anywhere between 20 minutes to just over an hour to complete, depending on your organization. Due to the high volume of applications, most applicants still haven’t received funds yet.

What types of nonprofit organizations qualify?

Generally, you must be some kind of registered nonprofit to qualify for these SBA loans. You also need to either have no more than 500 employees or meet SBA size requirements for your industry. If your industry isn’t listed on the SBA’s website, you must meet the 500-employee limit.

If your nonprofit is affiliated with a larger organization, you’re required to include that organization’s employees with your employee count — with the exception of nonprofits in the hospitality and restaurant industry, which are exempt from the affiliate rule.

Types of nonprofits that qualify for Paycheck Protection Loans

The following nonprofits are eligible to apply for the Paycheck Protection Program:

• 501(c)(3) nonprofit organizations
• 501(c)(19) veterans organizations
• Tribal businesses, as described in section 31(b)(2)(C) of the Small Business Act
• Houses of worship that meet 501(c)(3) criteria but aren’t registered

Types of nonprofits that qualify for Economic Injury Disaster Loans

The following nonprofits are eligible to apply for an Economic Injury Disaster Loan:

• 501(c) nonprofit organizations
• 501(d) religious nonprofit organizations
• 501(e) cooperative hospital service organizations
• Tribal businesses, as described in section 31(b)(2)(C) of the Small Business Act
• Houses of worship that meet 501(c)(3) criteria but aren’t registered

Apply for a Paycheck Protection Program loan today

These providers offer funding for the Paycheck Protection Program only. Disaster loans are only available through the SBA. You can apply through the SBA disaster website.

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Name	Product	Min. Credit Score	Turnaround Time	Required Documents
Lendio Paycheck Protection Loan		No minimum credit score	Varies by demand	Documented payroll costs — like 1099s, W2s, average monthly payroll expenses, payroll report for 2019 and 2020. Must provide number of employees, driver’s license or other government-issued ID, or 2019 IRS Form 941 or Form 944.	Check eligibility More Info		loading Fetching your data...
Credibly Paycheck Protection Loan		No minimum credit score	Varies by demand	Documented payroll costs — like 1099s and W2s.	Check eligibility More Info		loading Fetching your data...
Fundera Paycheck Protection Loan		No minimum credit score	Varies by demand	Documented payroll costs — like 1099s and W2s.	Check eligibility More Info		loading Fetching your data...

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What can disqualify a nonprofit organization?

Even if your organization meets the right tax exemption and size requirements, there are a few factors that could disqualify you from getting these loans.

• Affiliation with another organization. With the exception of the hospitality and restaurant industry, the SBA considers your affiliate’s employees when calculating your business size. If this tops 500 or your industry’s size requirements, you’re ineligible.
• Legal status. All stakeholders with more than a 20% share in your organization must be US citizens or permanent residents.
• Delinquencies and defaults. If your nonprofit or a stakeholder is currently delinquent on a federal loan, your organization won’t qualify. And past defaults on federal loans will also disqualify you.
• Criminal convictions. If a stakeholder was convicted of a felony or a misdemeanor involving a minor in the past seven years, your organization could be ineligible.
• Current criminal proceedings. If a stakeholder is in the process of any kind of criminal proceedings, from arraignment to parole, it will likely disqualify your organization.

3 alternatives for nonprofits

PPP loans and EIDLs can be useful — but they take a lot of time to process and might not offer as much as you need. Instead, consider these three alternatives.

• Grants. Many state and local governments as well as private organizations have launched COVID-19 grant programs —some specifically for nonprofits affected by the coronavirus outbreak.
• Coronavirus loans. State and local governments have also started offering low-interest and interest-free loans, though generally these are more available to for-profit businesses.
• Crowdfunding. Move your annual gala fundraiser online by setting up a crowdfunding campaign with a site like GoFundMe.

Bottom line

Nonprofits can now apply for SBA funding through the Paycheck Protection Loan and Economic Injury Disaster Loan Programs, thanks to the CARES Act. But with a slow turnaround and few approved applications, you might want to also consider other options.

Read our guide to grants for businesses and nonprofits affected by the coronavirus for more details. Or, get more tips on how to manage your business during the outbreak by checking out our COVID-19 hub.

Frequently asked questions

• Can nonprofits qualify for SBA 7(a) loans now?

  No, only for-profit businesses are eligible for loans through the regular SBA 7(a) program. While the PPP is technically an extension of the 7(a) program, the exception for nonprofits doesn’t extend to other types of SBA loans that fall into that category.

• Can nonprofits qualify for business loans from private lenders?

  Yes, nonprofits can qualify for business loans — especially from organizations that specialize in nonprofit funding.

• What credit score is needed for an SBA loan?

  There are no credit score requirements for the SBA loan programs available to nonprofits. All credit types are welcome, as long as you don’t have any defaults or current delinquencies on federal loans.