CARES Act and Paycheck Protection Program

Paycheck Protection Program

What is the Paycheck Protection Program?

The CARES Act established the Paycheck Protection Program, which allocates $660 billion in forgivable loans to help small businesses and nonprofits keep workers employed during this time.

Frequently Asked Questions

Is this the same as the Economic Injury Disaster Loan Program?

No, the Paycheck Protection Program is not the same as the SBA's Economic Injury Disaster Loan Program. A nonprofit can apply for both loans and decide which to take if approved for both.

View Comparison Chart

Eligibility and Borrowing Guidelines

Nonprofits in existence since March 1, 2020, or earlier with 500 or fewer employees are eligible. Employers that retain staff between February 15 and June 30 may have their loans forgiven, essentially turning the loan into a general operating support grant. View the Quick Reference Guide on Eligibility

Loan funds can be used for payroll and associated costs, including health insurance premiums, facilities costs and debt service.

A borrower is eligible for the lesser of $10 million or 2.5 times the average total monthly payroll costs (including benefits) from the one-year period prior to the date of application (plus any outstanding amount of a loan made under the Small Business Administration's disaster loan program since January 31, 2020 and the date the loan was refinanced as a part of this new loan program).

How can you apply?

Nonprofits can apply at any of the thousands of lending institutions that are approved to participate in the program. Call your bank or find SBA-approved lenders through the online Lender Match tool. You can also call your Small Business Development Center.

View Information Sheet  View Interim Regulations  Download Application Form

Below are steps you can take to be prepared to apply:

  • Download the application form.
  • Contact your bank to find out if they are an approved lender.
  • Calculate your average total monthly payroll expense for full-time employees over the last 12 months. Exclude individual salary amounts above the $100,000 cap, payroll and income taxes, salaries of employees outside the United States and contractors. See page 8 of regulations for more details.
  • Gather the financial information and other documents you will be required to submit with your application.
  • Check in with your board now to secure their approval if it's required to apply for such a loan.
  • Continue any efforts you have in place to manage and conserve cash. It is likely to take a few weeks to receive funds after loans are approved. 
Safe Harbor Provision

The SBA has created a new, permanent "safe harbor" for all loans less than $2 million. These loans will rely upon your original good-faith certification of need. 

Loans over $2 million may be audited, requiring that borrowers demonstrate that the loan is necessary for ongoing operations. If the standard is not met, the borrower will be required to repay the loan, with no further penalties. 

For details regarding the new safe harbor provision, see question 46 in the Paycheck Protection Program Frequently Asked Questions or read this informative article.

Loan Forgiveness

On May 15, 2020, the Small Business Administration released the Payroll Protection Program Loan Forgiveness Application, which borrowers must use if they'd like to request the forgiveness of PPP loan proceeds.

Note on Page 1 of the application the introduction of the Alternative Covered Period. This allows borrowers with a biweekly (or more frequent) payroll schedule to calculate payroll costs using the eight-week period that begins on the first day of their first pay period following their loan's date of disbursement.

June 5 legislation make some significant changes to the forgiveness guidelines. The provisions that impact nonprofit organizations the most are:

  • The "covered period" in which small businesses can spend the loan proceeds has been extended to 24 weeks. While the impact depends on your specific circumstances, most nonprofits will be able to request full forgiveness.
  • Small businesses will now have five years to pay back any portion that is not forgiven.
  • The loans can be forgiven even if you are unable to bring back the same number of employees and you have more time to rehire employees if social-distancing affects your business.
  • The amount of the loan that must be spent on payroll expenses has been reduced to 60%. You can now spend up to 40% of the loan on rent, utilities or other expenses.

FFTC tax and audit partner, Cherry Bekaert, recently offered a webinar on PPP loan forgiveness. Watch recording.

Pandemic Unemployment Assistance Program

Who is eligible?

Employees in nonprofits with fewer than four employees, as well as churches, religious nonprofits and those self-employed who are out of work due to COVID-19, may now receive unemployment insurance benefits.

How much support can you receive?

Unemployed workers can receive an additional $600 per week for up to four months, in addition to up to $350 a week from current NC unemployment benefits or up to $326 a week from current SC unemployment benefits.

Does the program help nonprofits themselves?

Yes. The federal government will pay states to reimburse nonprofits for half of the costs they incur through December 31, 2020, to pay unemployment benefits.

How Can You Apply?

North Carolina: The Division of Unemployment Security at the NC Department of Commerce released helpful guidance on how to apply for benefits. NC Tip Sheet

South Carolina: The SC Department of Employment and Workforce released a tutorial on how to apply.

Charitable Giving Incentive

Encouraging Charitable Giving

The CARES Act includes three incentives to encourage charitable giving:

  • A temporary universal deduction that applies to non-itemizing taxpayers for cash charitable contributions in 2020 up to $300.
  • The existing cap is lifted on annual cash contributions for those who itemize, raising it from 60% of adjusted gross income to 100%.
  • For corporations, the law raises the annual AGI limit from 10% to 25%. Food donations from corporations are available to 25% of AGI, up from 15%.
  • While gifts to donor advised funds are specifically excluded from these enhanced charitable giving provisions, donations to other funds at community foundations such as Agency Funds, Field of Interest Funds like the COVID-19 Response Fund and other regional efforts are eligible, along with direct gifts to nonprofit agencies.

We encourage you to share these incentives with your donor base, and FFTC is also working to inform our constituents.

Additional Resources

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* Information provided is general in nature. It is not intended to be, and should not be construed as, legal or tax advice. Foundation For The Carolinas does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy or completeness of this situation.


Devire Robinson

Deviré Robinson, J.D.

Vice President, Philanthropic Advancement

Email Deviré