On March 27, 2020, the House passed, and President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (CARES). This bill is an estimated $2 trillion economic stimulus package intended to provide immediate relief for individuals, nonprofits, businesses, and state and local governments.
Below is our current understanding of what this law means for independent schools.
Section 1102—Emergency Small Business Loans
This creates an emergency loan program providing loans of up to $10M.
- Eligible nonprofits must have been in existence on Feb 15, 2020, and have fewer than 500 paid employees (each countable employee, not just full-time employees).
- No personal guarantee is required.
- Loan amounts are the lesser of $10 million or 2.5 times the average total monthly payroll (including benefits) from the one-year period prior to the date of application.
- Loans can be used for payroll, health insurance premiums, facilities costs, and debt service.
- Loans are forgivable if the nonprofit keeps all staff on the payroll between March 1 and June 30, per Section 1106.
- Loan applications should be submitted through lenders who are partnered with the Small Business Administration or online at sba.gov.
Section 1110—Economic Injury Disaster Loans (EIDL)
The Small Business Administration also has Economic Injury Disaster Loans (EIDL). These enable qualified nonprofits to receive a check for $10,000 within three days, and may not require repayment.
Section 2103—Nonprofits that Self-Fund Unemployment Insurance
Nonprofits fall into three categories where Unemployment Insurance is concerned. They either pay state unemployment (SUTA) taxes like every other employer; they’re exempt from unemployment laws; or they self-insure, which requires they reimburse the state the actual amount of benefits their terminated or laid-off employees claim. If your school self-insures Unemployment Insurance, it appears you’re eligible for half of the costs of the benefits provided to your laid-off employees.
Section 2204—Modifications for Charitable Giving
This provision allows Americans who support charitable organizations in 2020 an above-the-line deduction of $300 for cash contributions, whether or not they itemize their deductions. Further, for individuals, CARES suspends the 2020 cap of 60% of adjusted gross income limit for all charitable giving and increases it to 100%.
Section 2302—Delayed Payment of Payroll Taxes
This allows employers to delay payment of the employer portion of payroll taxes in 2020, payable in equal halves at the end of 2021 and 2022. At this time, it appears that these programs are being administered through local Small Business Administration field offices.
You are encouraged to contact the SBA. You can review the law in full here.
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