Nonprofit Accounting Basics

Interim Stimulus Plan

Note: Articles published before January 1, 2017 may be out of date. We are in the process of updating this content.

Apr 30, 2020

Last week the Interim Stimulus Plan was passed by Congress and signed by President Trump as an amendment to the Coronavirus Aid, Relief and Economic Stimulus (CARES) Act.  The main provisions applicable to nonprofit organizations relate to the additional funding of the Payroll Protection Plan (PPP) and the SBA’s Economic Injury Disaster Loan (EIDL) Program.

The PPP has been increased by $310 billion to augment the $349 billion already awarded under the original CARES Act.  The original funding was fully depleted within two weeks of the roll out of the program and it is expected that the second round will result in same experience.  Because many small nonprofits were unable to obtain the loans from the approved funders in round one, $60 billion of the $310 billion has been earmarked for smaller funders to provide a more equitable chance for small organizations to receive the loans.  The provisions for these loans remain the same as those outlined for the original CARES Program:

  • Generally, less than 500 employees
  • Is available only to 501(c)(3) and 501(c)(19) organizations
  • The forgiveness provisions include payroll costs (with reductions for those making over $100,000 per year), rent, utilities and mortgage interest for a period of 8 weeks
  • The amount forgiven will be reduced if over 25% of the applicable expenses are not used for payroll costs or the number of employees is not maintained
  • The interest rate on the loan is 1% and has a two-year payback period.  Deferral of six months is allowed.

EIDL has been increased by $50 billion in loans and $10 billion in grants and is available to a broader group of exempt organizations.  The $10,000 emergency advances will still not need to be repaid and the terms of the loans are unchanged:

  • 2.75% interest rate for nonprofit organizations
  • There is an up to $2 million threshold for the loans
  • Up to 30 years to repay the outstanding amount
  • There is a one-year deferment of payment, but interest accrues from the date of issuance

Another stimulus package is currently being negotiated and we will keep you up to date with the details.