Nonprofits Getting PPP Loans, Others Laying Off Staff

More than half of nonprofits that submitted applications for Paycheck Protection Program (PPP) loans were accepted. Nearly one-quarter (24 percent) of organizations where the application was denied have begun to lay-off or furlough staff.

These are among the results of a survey of nonprofit social sector leaders across the country conducted by The Alliance for Strong Families and Communities (ASFC) and The NonProfit Times (NPT). The survey was administered to both the Alliance’s members and to nonprofits across the nation that subscribe to The NPT.

The findings, drawn from nearly 200 responses, indicate that of the 173 nonprofits that applied for PPP loans, 59 percent were accepted. The majority of those receiving loans accessed those via community banks (34 percent) and regional banks (31 percent) versus national banks (29 percent).

Of the nonprofits whose loan applications were delayed or denied, 24 percent have begun to furlough staff. And, 93 percent of those denied or delayed indicated that they will reapply for the program now that funding has been expanded.

The average number of days between submission and receiving funds was 11. Of those loan applications that were accepted, 77 percent have already begun to access funds. 

“The SBA Paycheck Protection Program (PPP) has helped stabilize many nonprofit organizations with critical funding that enables them to retain and compensate their workers, many of whom are providing essential services during this public health crisis,” said Susan N. Dreyfus, president and CEO of the Alliance for Strong Families and Communities.

“However, there are still a significant number of eligible smaller nonprofits who have not been able to access the loans and we are increasingly seeing the strains placed on larger nonprofits (those of 500 employees or more) who are not eligible for PPP loans,” said Dreyfus. “Organizations of all sizes need clarity on funding, forgivable loans and a dedicated funding stream so they aren’t competing with for-profit entities for the funding that enables them to run homeless shelters, residential centers for foster youth, emergency child care centers, homes for seniors and individuals with disabilities, food banks, and more in this time of crisis.”

It is good to see such a high percentage of responding nonprofits receiving funding, said Paul Clolery, editor-in-chief of The NonProfit Times. “The responses are generally negative on polling of this nature. Nonprofit managers need to be very careful because other regulations, not immediately tied to the loan, can be extremely damaging to nonprofits,” said Clolery.

An example is the U.S. Department of Labor instructing states to bill certain tax-exempt employers immediately for 100 percent of the costs of unemployment benefits paid to employees laid off as a result of the COVID-19 pandemic. The DOL guidance applies to a category of tax-exempt entities known as “reimbursing employers,” those that are permitted by Congress to self-insure claims for unemployment benefits by paying back the state unemployment trust fund for unemployment benefits paid to their former employees, Clolery said, citing the National Council of Nonprofits. 

Timely funding for the nonprofit sector, including human services community-based organizations, is more critical now than ever before. In a 2018 report commissioned by the Alliance for Strong Families and Communities and the American Public Human Services Association and written by Oliver Wyman and SeaChange Capital Partners, researchers analyzed the financial stability of human services community-based organizations (CBOs) of all sizes. A National Imperative: Joining Forces to Strengthen Human Services in America highlighted the economic and social impact of these organizations, and the need to preserve and strengthen their critical role in building foundational supports that contribute to the health and well-being of individuals, families and communities. Among the findings: An estimated 30 percent of human services CBOs have no margin for error with cash reserves that cover less than one month of operating expenses.