Navigating CARES Act Assistance Programs

April 1, 2020

Updated May 3, 2020

The CARES Act provides for two types of funding available to nonprofit organizations: the Paycheck Protection Plan (PPP) and Economic Injury Disaster Loans (EIDL). Both are administered by the Small Business Administration but have different rules and eligibility standards. They are loans and a portion of the funding can be forgiven if used for approved purposes (primarily payroll).

The second round of Paycheck Protection Plan funding opened on Monday, April 27. As of May 3, there is still funding available. If you are a nonprofit in Washington State consider applying for the PPP or EIDL loan, we recommend that you contact 501 Commons for technical assistance right away.

501 Commons can provide a quick consult to nonprofits trying to assess their financial situation and which federal stimulus loan might help your organization most. They can also provide information and resources that will help you prepare the materials you need for a successful application and may even be able to process your loan application or connect you with a bank that can help. Start at their CARES Act Resource Page.

Communities Rise offers free legal assistance to nonprofits. If you are struggling with a business legal matter like landlord/tenant relations due to COVID-19, or have questions about federal stimulus programs, request help here. Legal Clinic appointments are available. In addition, the Communities Rise COVID-19 Support page has many resources including links to videos that can walk you how to apply for a PPP or EIDL loan and what to expect.

Additional legal analysis of CARES Act programs and appropriate use of funds received by Perkins Coie law firm is available here. We thank the team at Perkins Coie for making their work publicly available to benefit nonprofits.

We all want to ensure that our PPP loans will be forgiven. SBA has not issued guidance on this topic yet, so we can’t say for sure what steps you need to take. Here is a good summary of what is known now, and Washington Nonprofits will be bringing you a webinar explaining the rules once they are published.

Before you proceed, consider this: These loan programs are not right for every organization. It is important to do some analysis about your specific situation to see if they can help you. They work best for organizations with paid staff (employees, not contractors). The loans will only be forgiven if they are used to support specific expenses (primarily payroll costs). If you are unable to fund the remainder of your operating costs, your organization may be better served by laying off staff and temporarily closing to get through this period.