We want to share some information with you that we received from the North American Interfraternity Conference regarding the CARES Act Paycheck Protection Program (PPP) and the Small Business Administration's (SBA) Economic Injury Disaster Loans & Loan Advance Program (EIDL).
You should inquire with your local finance/tax/legal professionals to determine if either option is good for you. However, here is some helpful information.
EIDL Loans
All 501c entities are eligible to apple for a COVID-19 EIDL loan, and this includes fraternity/sorority house corporations. The loan provides working capital up to $2 million to small businesses and can be used for payroll, accounts payable, debt payments and other bills that could have been paid had the disaster not occurred.
Click here to read more information directly from the SBA on the COVID-19 EIDL program. On that page you will also see the application link.
One of the highlights of the EIDL program is a Loan Advance of up to $10,000. This loan advance, in some places referred to as an "emergency grant," does not have to be repaid even if the applicant is denied the loan.
Note, only applicants that fully complete and submit an entire loan application will receive this advance. The applicant will be required to demonstrate certain qualifications, for example: ability to repay, credit history, substantial economic injury as a result of the disaster, etc.
How are the EIDL program and CARES PPP different?
- CARES PPP only applies to 501c3 organizations, whereas all 501c nonprofit organizations are eligible for EIDL.
- Although EIDL can provide an advance of up to $10,000, the applicant is still seeking to take out a loan that must be repaid. Under current law, there is no forgiveness beyond the $10,000, and an applicant must certify, among other things, that it can repay the loan.
A word of caution: If you plan to explore both the PPP and the COVID-19 EIDL loan program, understand that participation in one may affect the participation in the other. You should consult with your financial/tax professionals in completing these applications.
It is expected that the demand for EIDL loans will be far greater than the current supply. Therefore,
it is important that you submit your entity's EIDL application as soon as you can do so thoroughly.
Download this FAQ on the EIDL program and how to apply from Arnold & Porter, a firm that works with the NIC. This firm cannot provide guidance to individual fraternities, but the FAQ offers great insight. Again, please work with your local finance/tax/legal professionals to help you make decisions about how to move forward.
