CARES Act key provisions of interest to charitable organizations.

LONG BEACH, CA, UNITED STATES, April 14, 2020 /EINPresswire.com/ -- The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by the President on Friday March 27, 2020. Here are key provisions of interest to charitable organizations.

For Businesses (Including Nonprofits)
Small Business Loans
Small Business Interruption Loans/”Paycheck Protection Program”

- The Act expands the eligibility for businesses with fewer than 500 employees, including certain self-employed individuals, sole proprietors, and independent contractors, to borrow up to 2.5 times their average monthly payroll costs for the trailing twelve months, capped at $10 million, without the need for collateral or personal guarantees.

- Loans may be used for payroll, medical or sick leave, family leave, group health care benefits, mortgage payments, rent, utilities, and other debts.

- Payroll costs exclude compensation for employees whose annual salary exceeds $100,000.

- Certain covered loans may be eligible for forgiveness for proceeds used to meet payroll, with forgiveness amounts reduced if there is a reduction in either the number of employees or compensation for certain lower-paid employees during the covered period. Forgiveness of loans will not give rise to cancellation of indebtedness income.

Economic Injury Disaster Loan

- Small businesses, including ESOPs and nonprofits affected by the coronavirus in presidential and SBA-declared disaster areas are eligible to borrow up to $2,000,000.

- The interest rate is 2.75% for nonprofits and 3.75% for small businesses.

- Loans may be used for accounts payable, fixed debts, payroll, and other bills due to the virus.

Employee Retention Payroll Tax Credit

- The bill creates an employee retention credit for employers who close due to the coronavirus pandemic.

- Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.

- Eligible employers are those forced to at least partially suspend operations or those who experience a significant decline in gross receipts as a result of COVID-19.

Deferral of Social Security Taxes

- Employers may defer their portion of the 6.2% employer share of Social Security taxes through 2020, with the deferred amount payable over the following two years.

- The employer share of the Medicare tax may not be similarly deferred.

Economic Stabilization Fund

- Available for mid-sized businesses, including nonprofits, that have between 500 and 10,000 employees.

- Interest rates no higher than 2% and would not accrue interest or require repayments for the first six months.

- Must retain at least 90% of their employment levels as of March 24, 2020 through September 30, 2020.

- Includes limitations on compensation for officers and high-earning employees.

Grants from the National Endowment for the Humanities

- The National Endowment for the Humanities (NEH) will receive $75 million in supplemental funding to assist cultural institutions affected by the coronavirus.

- This emergency funding will support at-risk humanities positions and projects at museums, libraries and archives, historic sites, colleges and universities, and other cultural nonprofits.

For Your Individual Donors
Charitable Contributions

- The Act allows an above-the-line charitable contribution deduction of up to $300 for taxpayers who do not itemize deductions on their 2020 tax returns.

- For individuals who do itemize, cash contributions to public charities may be fully deducted (up to 100% of adjusted gross income) without regard to the usual percentage limitation. Contributions in excess of the taxpayer’s adjusted gross income may be carried forward for five years.

- The limitation for deductions of food inventory is increased from 15% to 25% for 2020.

Windes Nonprofit Team

Windes Nonprofit Team
WINDES
+1 844-494-6337
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