Can Nonprofits Apply for EIDL (Economic Injury Disaster Loan)?
A recent national emergency known as the COVID-19 global pandemic created an enormously detrimental effect on the financial sustainability of businesses and nonprofit organizations. This pandemic granted nonprofits all around the United States to be entitled to financial relief through the Economic Injury Disaster Loan (EIDL) Program under the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
All 501(c) organizations were able to apply for the federal loan in order to sustain the functions of the nonprofit organization. Let’s review what EIDL is, identify a few unique exceptions of the EIDL program due to COVID-19, and examine what the money can be used for.
What is EIDL (Economic Injury Disaster Loan)?
The Economic Injury Disaster Loan (EIDL) is a working capital loan providing funding for small businesses and private nonprofit organizations in order to alleviate economic injury. Typically, your nonprofit would have to apply for this loan by proving there was a crisis, in which the nonprofit is experiencing a temporary loss or dip in revenue resulting in the inability to pay bills and payroll.
Since the COVID-19 outbreak was declared as a national emergency, nonprofits did not have to report internal disaster as a reason for the loan. The federal government has offered this loan to 501(c) organizations with a term of up to 30 years, a maximum principal of $2 million, and an interest rate of 2.75% to help nonprofits get out of their financial burden.
Application Process and Eligibility
If a nonprofit organization has been established before the Coronavirus outbreak was declared as a national emergency on January 31st, 2020, you can apply for the EIDL. The nonprofit organization must submit an application to the Small Business Administration (SBA). To be eligible, you must also be a 501(c) organization. Once the application has been received, the nonprofit can demand up to $10,000 of the amount requested to be given as an emergency grant. It will be paid to the nonprofit within 3 days of receiving the application, so the organization does not fall behind on bills and expenses. This does not have to be paid back since it is a federal grant given as a result of a national emergency.
Furthermore, a nonprofit can apply for an additional loan, allowing up to a $2 million principal, with a term of up to 30 years, including a 2.75% interest rate.
A nonprofit who is eligible, is able to apply for this grant until December 31st, 2020.
If your nonprofit is involved with lobbying or political affairs, the nonprofit may not be eligible for this grant money.
What can the loan be used for?
Nonprofit organizations have expenses and payroll to pay, just like any other business model. Depending on the size, success, and revenue of the organization, a nonprofit may not be financially prepared for a global pandemic. This can truly destroy every ounce of a nonprofit’s goals and aspirations, so to avoid this harsh toll, apply for the EIDL grant and loan in order to pay for the nonprofit’s expenses.
An organization can use the EIDL grant and loan on managing payroll, paying increased costs due to low supply of products, accounts payable, paying for employee sick leave, paying rent or mortgage, or paying other expenses that were affected due to revenue decline. As stated earlier, this grant and loan money cannot be used on political activity or lobbying. It should only be used for the prosperity of the nonprofit so that it can continue to work to the betterment of the cause it is supporting.
We are, currently, in extremely unique circumstances as a result of the COVID-19 outbreak. Many businesses and nonprofits have failed and are continuing to fail. If your nonprofit has great financial accountability, the organization will be more likely to sustain itself in the long run. However, many nonprofits would not be here today without the eligibility of the EIDL program. On the bright side, nonprofit organizations were offered a relief packet to help them through the tough times, allowing them to continue toward the attainment of their mission.
Financing Solutions Nonprofit Line of Credit
Over the years so many nonprofit organizations have wanted a business line of credit to help with times when cash flow is down and important bills must be paid. However, the approval standards of banks always require collateral and a personal guarantee which are often very hard for nonprofits to come up with.
Since 2012, Financing Solutions has been the leader in providing a credit line to nonprofits and is rated A+ 5 stars by the BBB. The credit line requires no collateral or personal guarantees and is easy to get in place. Your nonprofit needs to be doing at least $200,000 per year in revenue to qualify.
The nonprofit line of credit costs nothing to set up, nothing until used, and when it is used, is very inexpensive. The credit line can be paid back at any time.
The time to set up a credit line for your nonprofit is when you don’t need the money. The nonprofit line of credit application takes 2-minutes to fill out and there is no obligation. Apply today.