Last week, the federal government enacted the Coronavirus Aid, Relief, and Economic Security Act. The $2 trillion CARES Act includes emergency relief for individuals, businesses, medical centers and nonprofits. There are some important time-sensitive implications for 501(c)(3) nonprofit organizations that we want to bring to your attention. You may want to act quickly to achieve optimal results. Here are a few key takeaways:
- 501(c)(3) organizations with fewer than 500 employees are eligible to apply.
- The 7(a) loan is a working capital loan to cover salaries, paid sick and medical leave, insurance premiums, rent, mortgage interest and utilities. This fund has been expanded to help organizations whose revenues have been reduced as a direct result of the COVID-19 pandemic.
- The loan repayment terms are very attractive: 10-year term, 4% interest, and no borrower or lender fees. In many cases, a significant majority of the loan will be forgiven based on certain conditions that include maintaining staffing levels.
To learn more, please see a webinar and other resources from Cohen & Co. here.
You can also download valuable information about CARES Act implications for nonprofits from Charles Schultz, president of Crescendo Interactive, here. Crescendo will host a free webinar about the CARES Act on April 6 – you can register here.
For more information on the provisions above and others that may have a positive impact on your organization during this challenging time, we recommend that you reach out to your tax advisors, your board members with applicable expertise on loans and tax advice, and/or your relationship contact at your financial institution.