What Nonprofits Need to Know About the Second Round of COVID-19 PPP Loans
During COVID-19, nonprofits have been doing so much to support their communities, and some organizations have faced a drop-off in donations. To offset the economic impact of COVID-19, the government is rolling out a second round of Paycheck Protection Program (PPP) loans.
Here is everything your nonprofit needs to know about receiving PPP loans and ensuring loan forgiveness.
Round 2 of the Paycheck Protection Program (PPP2) for Nonprofits
The Paycheck Protection Program supplies loans that help nonprofits and businesses afford to pay their employees during COVID-19. This effort started in 2020, and this March, a new round of loans is being sent out. As long as nonprofits stay within the spending guidelines, the government is promising to forgive these loans.
For information about COVID-19 tax relief for employees of education nonprofits, visit this blog.
What Can PPP2 Loans Be Used For?
One of the major keys to qualifying for a second PPP loan is making sure that your organization used the first loan correctly. Only using PPP loans for the approved expenses is also critical for getting loan forgiveness.
The first round of PPP is only supposed to be spent on payroll, rent, utilities, and employer-sponsored health insurance.
For the second round of PPP, the government expanded the list of approved expenses to help nonprofits and businesses keep their doors open. In addition to the expenses covered by the first PPP loan, PPP2 extends to operational expenses, property damage, supplier costs, and worker protection.
Which Nonprofits Qualify for PPP2 Loans?
Tax-exempt organizations that have suffered financial impact during COVID-19 can apply for the second round of PPP. Nonprofits that have under 300 employees and suffered a 25% decrease in gross receipts from 2019 to 2020 can apply for the second round of PPP.
In order to get a second loan, your nonprofits should have received a first PPP loan and spent the full amount on approved expenses.
How to Apply for PPP2
Nonprofits can complete a PPP2 loan application with the SBA. Click here for the PPP Second Draw Borrower Application Form.
How to Report COVID-19 Loans and Relief
One major requirement for keeping your organization tax-exempt is reporting all your financial information on Form 990 every year. That includes loans. Nonprofits can report any loans they received under the Paycheck Protection Program, as well as what they used them for.
Click here to find out about reporting contributions from fundraising events to the IRS. Not sure which 990 series form your organization needs to file? Visit this blog to find out about IRS filing requirements for nonprofits.
Nonprofits can file 990 series forms safely and easily with ExpressTaxExempt. Get error-checks, instant notifications, and friendly, U.S.-based support.
We know it has been a challenging time and we are here to support the nonprofit sector in any way we can. From tax-exempt news to Form 990 filing, your organization is safe with us.