Small Business Administration emergency loans available for nonprofits

• DOI: http://doi.org/10.1002/nba.30760
• Date: 01 May 2020
• Published date: 01 May 2020

MAY 2020 NONPROFIT BUSINESS ADVISOR

7

© 2020 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Industry News

Experts: Pandemic not likely to crush

charitable giving

With the world in which nonprots nd themselves

today looking ever more bleak, due to a global health

crisis, crashing nancial markets and the near certain-

ty of a recession—if not depression—on the horizon,

it might seem natural to assume that the fundraising

picture will be just as gloomy for the foreseeable fu-

ture. But an analysis of data from the last major eco-

nomic calamity, during the Great Recession of 2008

and 2009, shows that donors are likely to maintain

giving at levels close to what they’ve been at.

“If we look at what happened during the Great

Recession, giving to nonprots remained steady, with

only slight declines over the entire period,” said Ben

Miller, chief analytic ofcer of DonorTrends and sec-

retary of the Growth in Giving Initiative, a program

of the Association of Fundraising Professionals.

In fact, the data shows that despite a 39% decline

in the S&P 500 during the rst few months of the

Great Recession, giving to nonprots actually rose

slightly, and then declined by only 8% by the end of

the recession.

“While we have to be careful because it is not a

true apples-to-apples comparison to today’s head-

lines and the concept of ‘social distancing,’ the data

does suggest that donors are very supportive of their

nonprots through uncertain economic times,” Miller

said in a blog post highlighting his research.

An extra wrinkle in today’s situation, as Miller

noted, is the social distancing that has much of the

world in isolation. That’s played out for nonprots

in the form of delayed or canceled fundraising events

that have traditionally brought in sizable chunks of

cash for their organizations. Meanwhile, their major

donors are watching stock portfolios sink in value day

by day. With that fact in mind, nonprots are often

hesitant to ask these crucial donors to continue their

support at the same levels they had been accustomed

to during market upswings.

But Miller noted that the reasons that donors give to

charity still exist, even in a severe down market. They

still want to make a positive difference in the world,

and help their favorite nonprots in their time of need.

For nonprots, the best way forward might be

Small Business Administration emergency loans available

for nonprots

In its effort to minimize economic disruption

wrought by COVID-19, the U.S. Small Business Ad-

ministration is working directly with state governors

to provide targeted, low-interest disaster recovery

loans to small businesses and private nonprot

organizations that have been severely impacted by

the pandemic.

The SBA’s Economic Injury Disaster Loans offer

up to $2 million in assistance for small businesses

and private nonprots to help them weather the

temporary loss of revenue they are experiencing.

These loans may be used to pay xed debts, pay-

roll, accounts payable and other bills that can’t be

paid because of the disaster’s impact. The interest

rate is 3.75% for small businesses, while the interest

rate for nonprots is 2.75%, the agency said.

The loans are available with long-term repayment

schedules in order to keep payments affordable, up

to a maximum of 30 years. Terms are determined

on a case-by-case basis, based upon each borrower’s

ability to repay.

When a state’s or territory’s governor requests

it, the SBA will issue an Economic Injury Disaster

Loan declaration. Such a declaration makes loans

available to small businesses and private, nonprot

organizations in designated areas of a state or ter-

ritory, the agency said.

The SBA’s Ofce of Disaster Assistance will coor-

dinate with the state’s or territory’s governor to sub-

mit the request for Economic Injury Disaster Loan

assistance. Once a declaration is made for designated

areas within a state, details on the application pro-

cess for Economic Injury Disaster Loan assistance

will be made available to all affected communities,

notifying small businesses and nonprots of their

eligibility for emergency assistance, the SBA said.

For additional information on the program, visit

https://disasterloan.sba.gov. ■

(See PANDEMIC on page 8)