Incentivizes Charitable Giving
The CARES Act incentivizes charitable giving by creating an above-the-line charitable giving deduction worth up to $300 on this year’s tax returns. This will be available to people who do not itemize their other deductions. The CARES Act also raises charitable giving limits for people who itemize deductions and raises the limit on corporate deductions from 10% to 25%. This legislation intends to provide for our nonprofits and faith communities by giving people a reason to donate to them during a difficult year.
Small Business Loans
Churches and nonprofits organized as a 501(c)(3) nonprofit with under 500 employees are eligible for the Paycheck Protection Program (PPP) to cover the organization’s payroll. The CARES Act provided $349 billion for the Small Business Administration (SBA) to administer the PPP. The SBA will provide a loan for the organization to incentivize keeping their employees on payroll and will forgive the loans if all employees are retained for eight weeks. The PPP will provide loans of up to $10 million to small businesses that have been harmed by the coronavirus pandemic. PPP loans may be used to cover payroll costs, healthcare benefits, mortgage interest payments, rent, utilities, and other interest payments.
You can apply for a PPP loan through a local SBA-approved lender. You can find a list of SBA-approved lenders in Virginia here.
Lenders begin processing applications soon and will be available through June 30. You can find a sample application form here.
Virginia small nonprofits are also eligible for Economic Injury Disaster Loans (EIDL). The EIDL program provides loans of up to $2 million to help businesses cover temporary losses of revenue. The interest rate on these loans is 3.75% for small businesses and 2.75% for nonprofits.
In addition, the CARES Act allowed small businesses and nonprofits to receive an immediate grant of up to $10,000 within three days of applying for EIDL assistance. This grant will not need to be repaid.
Deferring Payroll Taxes
Additionally, the CARES Act allows nonprofit employers to defer Social Security payroll taxes from the end of March 2020 through the end of 2020 if they do not use the Paycheck Protection Program. By the end of December 2021, the first half of the payroll taxes deferred will be due, and by the end of 2022 the full amount will be due. This provision aims to help nonprofits and faith-based organizations weather these financially uncertain times while keeping their employees working.