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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.
Nonprofits can qualify for the Economic Injury Disaster Loan (EIDL) SBA loan program, which is open to nonprofits struggling during the coronavirus outbreak, thanks to the CARES Act.
The SBA Economic Injury Disaster Loan (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.
When the program started, you could also apply for an advance of up to $10,000 that you didn’t have to repay. However, that has since ended and grants through the EIDL program are no longer available.
While disaster loans are meant to cover more operating expenses than the Paycheck Protection Program covered, 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 look into other sources of funding, like business loans, as well.
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.
The PPP was a low-interest incentive program to encourage small business owners to keep staff on payroll during the coronavirus outbreak. Applications closed in August, and the SBA is now processing applications for loan forgiveness.
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.
To qualify, you will need to provide a list of eligible payroll and operating expenses. However, nonprofits that borrowed less than $50,000 are given more lenient requirements. Even if you were unable to rehire staff and had to reduce wages, you may still qualify for full forgiveness.
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.
The following nonprofits are eligible to apply for an Economic Injury Disaster Loan:
The following nonprofits are eligible to apply for the Paycheck Protection Program:
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.
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.
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.
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.
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.
Answers to common questions about SBA loans for nonprofits.
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.
Yes, nonprofits can qualify for business loans — especially from organizations that specialize in nonprofit funding.
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.
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