Due to the COVID-19 public health crisis, many AGB members are facing financial disruption stemming from emergency support to students and staff, unrealized revenue, and other challenges. The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes multiple loan programs to assist businesses and organizations as well as higher education institutions. Below is some information about three main opportunities:
- Paycheck Protection Program (PPP)
- Small Business Administration COVID-19 Economic Injury Disaster Loan (EIDL) Program and loan advance
- Midsize and large business loan programs
Public and independent institutions, as well as institutionally related foundations, are eligible for the midsize and large business loan programs. The PPP and EIDL programs are only available to independent institutions and institutionally related foundations.
Resource: American Council on Education Loan Summary.
Paycheck Protection Program
The PPP is intended to support businesses, including nonprofits, with fewer than 500 employees by providing a loan to cover up to eight weeks of payroll costs. These funds can be used for payroll, rent, utilities, and mortgage interest, with an option of loan forgiveness if the borrower meets certain criteria. If you think your institution or foundation may qualify, AGB recommends applying as soon as possible. To apply, contact a local lender who has been designated a 7(a) SBA lender.
Resources:
- AGB Alert: Paycheck Protection Program for Small Colleges, Universities, and Institutionally Related Foundations
- Paycheck Protection Program application form – form that eligible lenders will use
- Paycheck Protection Program information sheet – short summary of the PPP for potential borrowers
- Paycheck Protection Program top-line overview – Department of the Treasury one-page overview
- SBA interim rule regarding the PPP – SBA’s interim final rule on the PPP’s implementation
Small Business Administration COVID-19 Economic Injury Disaster Loan Program and Loan Advance
The EIDL Program is intended to support small organizations (under 500 employees), including nonprofits, that have been severely impacted by a natural disaster. The application has been streamlined and expanded in light of COVID-19, including a loan advance of up to $10,000 that can be forgiven if certain requirements are met. It provides small businesses with working capital loans of up to $2 million. AGB recommends applying as soon as possible. If you think your institution or foundation may qualify, AGB recommends applying as soon as possible. Applications are available on the SBA website.
Note: If applicants receive a PPP loan, they cannot use these funds for the same purpose.
Resources:
- EIDL application form – apply directly through the SBA
- Small Business Development Center search – regional Small Business Development Centers can offer guidance about the application process
Midsize and Large Business Loans
Under Title IV of the CARES Act, the U. S. secretary of the treasury is authorized to make up to $500 billion in loans and other investments to any business that “has not received adequate economic relief” under other provisions of the CARES Act, although $46 billion is automatically directed to the airline/aviation industry. It further requires the treasury secretary to ask the Federal Reserve to create a direct loan program for businesses and nonprofits that employ between 500 and 10,000 employees. The act requires that interest rates cannot exceed 2 percent per year and no payments are expected for the first six months. The borrower must certify that the loan is essential to support the borrower’s operations, and they must retain 90 percent of the workforce (without outsourcing or offshoring jobs) for two years after repayment.
The Treasury Department is expected to issue guidance about midsize and large business loans on Monday, April 6. AGB will update this page when more information is available.
For additional COVID-19 information and AGB resources, please click here.