In addition, these organizations are eligible to have such loans forgiven, effectively turning the loans into grants, if additional requirements are met. The CARES Act adds that, for a "small" nonprofit that applies for a disaster loan, the SBA may provide an advance on such loan in amount of up to $10,000 within three days of application for the loan. 202-234-1224. Trade associations, chambers of commerce, real estate boards, boards of trade and other 501 (c) (6) tax exempt organizations, as part of their mission, are “devoted to improving business conditions of one or more lines of business” and “direct their efforts at promoting the common economic interests of all commercial enterprises in a trade or community.” All 501(c)(3) organizations have the option of paying unemployment insurance tax or self-insuring. Please contact the author or your responsible Holland & Knight lawyer for timely advice. These provisions temporarily relax the requirement that a credit union primarily serve natural persons and expand the ability of a credit union to obtain additional liquidity from the National Credit Union Central Liquidity Facility. Thus, charities and veterans organizations are eligible for loans during the covered period of Feb. 15, 2020 through June 30, 2020, as long as the organization does not have more than 500 employees and was operational as of March 1, 2020. Charities and veterans organizations can use the loan proceeds for certain payroll costs, rent, utilities, mortgage interest, and interest on other debt obligations incurred before Feb. 15, 2020. To be eligible for disaster assistance under the existing 7(b)(2) program, a nonprofit had to be located in an area affected by a disaster or emergency, and the nonprofit had to suffer a substantial economic injury as the result of such disaster. The CARES Act reimburses these charities for half of their costs of unemployment benefits provided to laid-off employees. This Holland & Knight alert is an overview of the CARES Act programs and the eligibility of nonprofit organizations for such business programs but does not cover those programs established specifically for the healthcare industry and educational institutions. We expect the House of Representatives to pass this same bill soon. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. The CARES Act provides at least $454 billion to the Treasury Department to back various forms of assistance provided by the Federal Reserve to lenders and eligible businesses, states, and municipalities.1 The Treasury Department and Federal Reserve have broad discretion in how the financial assistance will be provided—with many details yet established. However, the bill does not include assistance for 501 (c) (6) organizations such as trade associations that are, in some cases, experiencing the same operational challenges that large and small businesses are facing due to the coronavirus pandemic. See CARES Act Tit. Read the letter here and the find the form to sign on here. } CARES Act provides for a refundable payroll tax credit up to a $5,000 per employee for nonprofits where operations were fully or partially suspended due to a COVID-19 shutdown order or whose gross receipts declined by more than 50% when compared to the same quarter in the prior year. In addition, the nonprofit must agree to certain limitations on compensation paid to highly compensated employees. The hallmark of Holland & Knight's success has always been and continues to be legal work of the highest quality, performed by well prepared lawyers who revere their profession and are devoted to their clients. Reaching out to your Member of Congress and two Senators is an easy way to elevate the impact locally. Feel free to reach out to for any questions. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. While small businesses and 501(c)(3) organizations (with 500 employees or less) are eligible for the Paycheck Protection Program and its generous – and much needed — benefits, 501(c)(6) organizations are not. A summary of the latter programs, as well as programs available to private sector industries, can be found on Holland & Knight's website. The CARES Act allows employers to claim a new credit against applicable employment taxes in an amount equal to 50 percent of the qualified wages paid after March 12, 2020, and before Jan. 1, 2021, with respect to certain employees, up to a maximum of $10,000 of wages per employee. The CARES Act, previously passed by the Senate in a 96-0 vote, is a mix of direct cash payments to many Americans, financial support for small businesses and targeted sectors of the economy, and more resources for frontline medical support… For student loans, you can start with Section 3513 on page 333. Will 501C6 organizations receive assistance under the Senate proposal? Most of the financial services provisions include fund distribution and their respective requirements across the four Titles of the Act. The CARES Act also allows for a second phase of funding towards Child nutrition and food stamps for the needy, also known as SNAP. To be eligible, a nonprofit organization must have between 500 and 10,000 employees and must be a U.S. entity with significant operations in the U.S. and a majority of its employees located in the U.S. A nonprofit organization seeking such a loan must certify that it will use the funds to retain at least 90 percent of its workforce at full compensation and benefits until Sept. 30, 2020, and that, within four months of the end of the COVID-19 emergency, it intends to restore at least 90 percent of the workforce that it had as of Feb. 1, 2020. “Extending the Paycheck Protection Program to 501(c)(6) Organizations”. jQuery('#popmake-4038').popmake('close'); The Paycheck Protection Program is a $350 billion portion of the CARES Act that provides forgivable loans to small businesses and all 501c3 nonprofits including churches and religious nonprofits. Nonprofits managers must consider the entity’s whole operations when determining the decline in … II § 2205 (Modification of Limitations on Charitable Contributions During 2020). document.addEventListener( 'wpcf7mailsent', function( event ) { Eligible payroll costs do not include annual compensation greater than $100,000 for individual employees.

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