Do non-profit organizations qualify for PPP loans? How do I apply?

In this 2-minute read:

  • Can a non-profit organization or faith-based organization apply for a PPP loan?
  • Which types of non-profit organizations are eligible for PPP loans, and which are not?
  • How is the process of applying for a PPP loan different for a nonprofit?
  • Important details about the application process for non-profit PPP loan applications

Small businesses across the country are scrambling to apply for Paycheck Protection Program loans under the CARES act of 2020, signed into law in March to help reduce the economic devastation caused by the COVID-19 pandemic.

One question many people have is whether their non-profit organization can apply and qualify for PPP loans, and the short answer is, yes, they can (with some exceptions). There are some important points to be aware of.

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Which kinds of non-profit organizations are eligible for PPP loans, and which ones are not?

Your non-profit organization can participate in PPP loans if it:

    1. was in existence on March 1, 2020
    2. is exempt from federal income tax under section 501(c)(3) of the IRS code, or is a war veterans’ organization exempt under section 501(c)(19) of the IRS code
    3. has 500 or fewer full and/or part-time employees (there may be some exceptions – check with your lender).

This implies that other nonprofit organizations, such as 501(c)(4) or 501(c)(6) organizations, are likely not eligible for PPP loans under the federal CARES Act.

How is the process of applying for a PPP loan different for non-profit organizations?

Authorized non-profit organizations (and churches or other faith-based organizations) can still apply for PPP loans, but there are some specific instructions on how to handle the application based on the federal government’s guidance for the PPP loan program.

Want to know how much you may qualify for? Check out our PPP loan calculator

General application guidance for nonprofits applying for PPP loans 

The PPP application requires that you enter information for one “owner.” For non-profits, that information should be related to the person authorized to sign on behalf of the company. 

The information required includes a driver’s license and potentially other personal identification information. When you note in the application that you are a non-profit organization, you can either enter 0% or 20% ownership in the application form and the loan officer should understand.

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Other important points and tips for nonprofits applying for PPP loans

Name of primary contact: Who should sign your loan application depends on the structure of your organization and your by-laws. It should be someone in a leadership position, for example your Executive Director, Chief Executive Officer, or Board Chair.

  • List of Owners: 501(c)3 nonprofit organizations are not privately owned by individuals. In this box, you should enter: None – 501(c)3 Charity.
  • Question Sections (This section must be completed in order for the application to be valid.)
    • Questions 1-4 should be answered on behalf of your organization.
    • Questions 5 and 6 should be answered by the Primary Contact listed on the application.
  • Application Signee: The person identified as the Primary Contact at the top of the application should be the signee of the loan application.

Click to learn what documents you need to apply for a PPP loan

Are faith-based organizations, including houses of worship, eligible to receive SBA loans under the PPP and EIDL programs?

Yes, and we additionally clarify that faith-based organizations are eligible to receive SBA loans regardless of whether they provide secular social services. That is, no otherwise eligible organization will be disqualified from receiving a loan because of the religious nature, religious identity, or religious speech of the organization. 

For those looking for a deeper dive into this type of organization as pertains to the PPP loan process: the requirements in certain SBA regulations—13 C.F.R. §§ 120.110(k) and 123.301(g)—impermissibly exclude some religious entities. Because those regulations bar the participation of a class of potential recipients based solely on their religious status, SBA will decline to enforce these subsections and will propose amendments to conform those regulations to the Constitution. 

Although 13 C.F.R. § 120.110(a) states that nonprofit entities are ineligible for SBA business loans (which includes the PPP program), the CARES Act explicitly makes nonprofit entities eligible for the PPP program and it does so without regard to whether nonprofit entities provide secular social services.

IMPORTANT: Please read these important clarifications regarding religious organizations applying for PPP loans.

Please search our complete PPP loan FAQs here

There’s still time to apply for a PPP loan, but hurry! The extended deadline for application is August 8, 2020

If you haven’t applied for your PPP loan and you determine it’s right for you, there is still time. Talk to your lender and get your application submitted ASAP.

Sign up for your Womply Free account and we’ll keep you updated on new funding opportunities. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology.

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