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SBA loans for nonprofits

Government-backed coronavirus relief is now available to tax-exempt organizations.

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The deadline to apply for the Paycheck Protection Program (PPP) has moved to May 31, 2021.

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.

Which SBA loans can nonprofits qualify for?

Nonprofits can qualify for the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) loans.

EIDL

The EIDL program originally offered loans up to $2 million based on your operating expenses — but that has since been lowered to just $150,000. The interest rate for the EIDL is 2.75% for nonprofits. Terms can stretch as long as 30 years, depending on your organization’s ability to repay.

The America Rescue Plan Act also relaunched the EIDL targeted grant. This time it’s only $5,000 — and will roll out to businesses and nonprofits that saw a 50% decrease in revenue with no more than 10 employees.

After two weeks, it will become available to all businesses or nonprofits with 10 employees or fewer. And after another two weeks, it will be available to all eligible nonprofits and small businesses.

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. Due to the high volume of applications, processing times vary and it may take a few weeks or longer to receive funding.

PPP loans

The PPP is a low-interest loan program that offers 2.5 times your monthly payroll costs, with the option to qualify for up to 100% forgiveness depending on how you spend the funds. If you’ve already received a loan, you might be eligible to apply for a Second Draw PPP loan. This round of funding ends on May 31, 2021, so get your application in as soon as you can.

How to apply for a PPP loan

You can apply for a PPP loan from an SBA-approved lender. You can find one on our guide to lenders currently offerings PPP loans. If you borrowed a PPP loan, you can apply for PPP loan forgiveness through your lender, although not every lender has begun to accept applications for this round of funding.

What types of nonprofit organizations qualify?

Generally, you must be a 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 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

Types of nonprofits that qualified 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
  • 501(c)(6) organizations that aren’t involved in lobbying or political activity
  • Other 501(c) organizations with 300 employees or fewer — excluding 501(c)(4) 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
  • Nonprofit news organizations

My nonprofit is a faith-based organization. Is it eligible?

Yes. The CARES Act also opened up both of these programs to faith-based organizations — even those that don’t provide secular services. But your organization is required to meet a few legal requirements while it’s paying back the loan. You can get more details on what this means for you with our guide to SBA loans for faith-based organizations.

Apply for a PPP loan today

Below is a list of online lenders offering SBA Paycheck Protection Program loans. We recommend applying as soon as possible, since funds are available on a first-come, first-served basis. Get help filling out the application with our guide.

Name Product Min. Credit Score Turnaround Time Required Documents
Lendio Paycheck Protection Program loans
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.
SmartBiz paycheck protection loans
No minimum credit score
Varies by demand
Documented payroll costs — like 1099s and W2s.
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Apply for an SBA Loan today

Name Product Filter Values Loan amount APR Requirements
Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★
Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
ROK Financial business loans
Finder Rating: 4.7 / 5: ★★★★★
ROK Financial business loans
$10,000 – $5,000,000
Starting at 6%
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.
Seek Business Capital loans
Finder Rating: 4.5 / 5: ★★★★★
Seek Business Capital loans
$5,000 – $500,000
Varies by lender
Personal credit of 680+, no bankruptcies in the last 4 years.
Startups and newer businesses could qualify for loans and credit cards with a custom financing package.
SmartBiz business loans
Finder Rating: 4.3 / 5: ★★★★★
SmartBiz business loans
$30,000 – $5,000,000
4.75% to 7.00%
650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
Get funding for your small business with a government-backed loan and extended repayment terms.
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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. One exception is delinquencies or defaults on federal student loans.
  • Criminal convictions. If a stakeholder was convicted of a financial-related felony in the past five 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.
  • Number of full-time employees. Different types of nonprofits have different size requirements for the PPP. Make sure yours meets the quota before you apply.

5 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.

  • Shuttered Venue Operator Grants. Nonprofits that rely on ticket sales may qualify for this live venue grant program — as long as their events are produced and managed by paid employees.
  • Restaurant Revitalization Grants. Nonprofits in the food service industry might be able to qualify for the Restaurant Revitalization Fund as long as they haven’t already received a shuttered venue grant.
  • Other grants. Nonprofits that depend on ticket sales or those in the food service industry might can qualify for grants from the SBA. And many state and local governments as well as private organizations have launched COVID-19 grant programs.
  • 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.

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