Funding for PPP and EIDL Replenished

On April 24, 2020, the President signed into law supplemental appropriations replenishing the funding of two federal loan programs that assist small business and private nonprofit employers, including Community Action Agencies (CAAs) and state associations, impacted by the COVID-19 outbreak. H.R. 266 injects an additional $310 billion into the Paycheck Protection Program (PPP) and $60 billion into the Economic Injury Disaster Loans (EIDL) program, which includes $10 billion for EIDL advances. Funding for these two programs, created under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), had been exhausted in a matter of weeks.

We encourage eligible organizations who have not yet applied to do so as quickly as possible. While the PPP is available through June 30, 2020 and the EIDL loans and advances are available through December 31, 2020, it is likely that the funding will again run out before the programs end. The Small Business Administration (SBA) will process loan applications on a first-come, first-served basis.

Each program is summarized below, and additional details about eligibility, uses of the funds, and specific considerations for the Community Action network are available on our CARES Act Benefits web portal:

1. Paycheck Protection Program (PPP) loans, available only to 501(c)(3) tax-exempt organizations with fewer than 500 employees and fully forgivable if at least 75% of the loan is spent on qualified payroll costs, with the remainder used for qualifying mortgage interest, rent, and utilities payments. Note that PPP loans may not be used to pay any federal employment taxes, including the employer’s share of FICA (Social Security and Medicare taxes).

2. Economic Injury Disaster Loans (EIDL) are available to all private, nonprofit organizations that have been in operation since January 31, 2020 and have suffered substantial economic injury as result of COVID-19. Loans may cover payroll costs, rent, and mortgage, and are not forgivable. CAPLAW had previously stated that these loans were only available to organizations with fewer than 500 employees, but has since clarified that all nonprofit organizations are eligible. Applicants may still receive an advance of up to $10,000 that does not have to be repaid.

This News Flash is part of the Community Services Block Grant (CSBG) Legal Training and Technical Assistance (T/TA) Center. It was created by Community Action Program Legal Services, Inc. (CAPLAW) in the performance of the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services Cooperative Agreement – Grant Award Number 90ET0467-03. Any opinion, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services, Administration for Children and Families.

The contents of this news flash are intended to convey general information only and do not constitute legal advice. Any communication through this publication or through CAPLAW’s website does not constitute or create an attorney-client relationship. If you need legal advice, please contact CAPLAW or another attorney directly.