CARES Act: Relief for Associations

Please note: This blog is current to the date of its publication, Wednesday, April 8. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.

As new information becomes available about the Coronavirus Aid, Relief and Economic Security (CARES) Act, it’s important to understand which elements of the program your organization could benefit from. For associations classified as 501(c)6 organizations, SST recommends evaluating sections 1110, 2301 and 2302, all of which we’ve summarized below.

SBA’s Economic Injury Disaster Loan (EIDL) Program – Section 1110 of The CARES Act

  • Up to $2 million in funds available to pay payroll, debts, accounts payable and other operating expenses
  • Interest rate is capped at 2.75% for nonprofits
  • Loan terms of up to 30 years
  • Waives standard EIDL requirements
  • No application fee and no prepayment penalty
  • Applicant may receive a $10,000 emergency advance within 3 days of submitting the application that doesn’t have to be repaid if application is denied
  • Full funding within 3-4 weeks
  • Borrower can request additional funding as needed
  • Loan payment deferral of up to 12 months
  • Organizations don’t have to accept if they are approved (application and acceptance are two different things)

Apply as soon as possible here.

Employee Retention Payroll Tax Credit – Section 2301 of The CARES Act

  • Refundable payroll tax credit of up to $5,000 for each employee (half of the first $10,000 in wages per employee)
  • Effective for wages paid after March 12, 2020, and before Jan. 1, 2021
  • Reduced by any credits claimed for emergency sick pay or emergency family leave pay under FFCRA

Eligible associations in which the average number of full-time employees in 2019 was 100 or less must have carried on a trade or business (including NFPs) during 2020 and meet one of the following criteria:

  • Operations were fully or partially suspended due to orders from a governmental entity limiting commerce, travel or group meetings
  • Experienced a reduction in the organization’s gross revenue of at least 50% when comparing any calendar quarter in 2020 to the same calendar quarter in 2019 (until gross receipts for a calendar quarter in 2020 exceeds 80% of the amount for the corresponding quarter of 2019)

Deferral of Payment of Employer’s Share of Payroll Taxes – Section 2302 of The CARES Act

  • Delays employer portion of payroll taxes (6.2% for Social Security) for March 27, 2020, through Dec. 31, 2020 wages (does not include Medicare)
  • First 50% is due Dec. 31, 2021
  • Second 50% due Dec. 31, 2022
  • Will not be forgiven or delayed past the established due dates (IRS will still collect payment)

For more information or help evaluating which assistance program is best for your association, contact SST today or visit our COVID-19 resource page for additional insight.

Thanks to SST team member Leslie Shannon for providing the content for this blog post.