The CARES Act provides over $2 Trillion in emergency relief. For childcare and preschools struggling to pay staff members, utilities, and other operational costs, it’s important to know several aspects of the CARES Act that can help your organization survive the pandemic.
The CARES Act can benefit your entire team by:
#1. Granting Low-Interest Loans to Cover Payroll, Rent, and Other Necessities
The Paycheck Protection Program provides SBA loans to small businesses with less than 500 employees. This program includes nonprofit childcare centers that are organized as a 501(c)(3) and 501(c)(19).
SBA loans from the Paycheck Protection Program are available through approved banks, credit unions and some non-bank lenders and can be used for payroll costs, interest, rent and utilities. The loans require no personal guarantee or collateral and principal, while interest is capped at 4% and fees are deferred for 6 months.
Expect the vast majority of small businesses to apply for these loans, and get your application in the queue early by completing and submitting them immediately.
#2. Offering Forgiveness for Employers Who Meet Specific Criteria
Under Section 1106 of the CARES Act, these SBA loans are eligible for forgiveness for employers that maintain staff employment (or at least 90% of employment) at full compensation between March 1 and June 30th.
This is to encourage small businesses retain staff (which can be a challenge in the childcare business as it is).
The US Chamber of Commerce has produced a great summary on the Paycheck Protection Program. For more information on PPA and SBA loans, and loan forgiveness eligibility, contact your bank or financial institution.
#3. Providing Loans with Emergency Funding
Section 1110 of the CARES Act provides Economic Injury Disaster Loans, also without collateral or personal guarantee requirements and includes the ability to receive a $10,000 emergency advance within three days of applying. Emergency advance funds can be used for payroll costs, rent/mortgage payments, or increased material costs. If the application is denied, the applicant is not required to repay the $10,000 advance.
Again, act quickly here. The earlier you apply, the earlier you’re likely to receive the financial assistance you need.
#4. Incentives for charitable donations
Section 2204 of the CARES Act provides incentives for charitable donations during 2020 regardless of whether they itemize deductions. The primary benefit allows individuals to get an “above-the-line” deduction for up to $300.
If your organization is a nonprofit, this is great information to share with your families and on your social media accounts while asking them to support your program during this challenging period.
Additional Information on Provisions of the CARES Act
- How Nonprofit Centers Can Utilize the New Federal Laws Dealing with Covid -19
- COVID-19 Relief Resources for SMBs
Note: We encourage you to consult your advisors (e.g. accountant or attorney) for professional advice on these programs.