The Foraker Group

Do you need help finding or applying for grants to get your organization through the current crisis? We are offering grant writing services to assist nonprofits responding to impacts of the coronavirus. Whether your organization needs help finding grant opportunities, drafting proposals, or creating budgets for proposals, our team of experienced grant writers may be able to assist you.

We can help you:

• Write a proposal
• Find grant opportunities to match your needs
• Craft a budget for your proposal
• Edit a draft proposal that you have written
• Understand how to position your organization when communicating with potential funders
• Get set up for success once you are funded

Contact us for your free 30 minute consultation.

The federal government will soon send $1.25 billion in CARES relief funding to state and local governments. Nonprofits are an essential part of Alaska life, and we strongly believe they should be included at every level of funding. As part of her testimony before the House Labor and Commerce Committee on April 25, 2020, Foraker President/CEO Laurie Wolf presented three considerations and seven requests related to funding and strongly encouraged Alaska leaders to implement them in their policies and procedures. You can read her full testimony here.

Three considerations for relief

First – We must plan for the future we want to see in our recovery and beyond.

Second – Time is critical, and support must occur in at least two phases.

Third – Recognize that many avenues are present within the CARES Act and there are many ways to support industries, sectors, and regions.

A summary of our seven recommendations

1. Say “nonprofits” – Recommendation: Every time you use the words “small business” in your relief response include nonprofits.
2. Support all small nonprofit businesses – Recommendation: Alaska’s solution should include all nonprofits that have been financially impacted by COVID-19. Recommendation: Create granting programs based on mission activity in Alaska not based on staffing as a qualification.
3. Grants, not loans – Recommendation: Create a separate granting option with a minimum of $50 million for nonprofits outside the state process.
4. If loans, make them accessible – Recommendation: Require equitable and appropriate access for nonprofits to any loan program created or mandated by the state. We welcome the use of Foraker’s recommended parameters for nonprofits to access a loan program.
5. Partner with local governments – Recommendation: Strongly encourage local governments in your district and in your overall guidelines to include nonprofits in both their direct and indirect funding decisions.
6. Adopt federal OMB flexibility – Recommendation: Ensure flexibility in state grants and contracts by following, at a minimum, the federal Office of Management and Budget COVID relief rules. Recommendation: Ask nonprofit leaders which of the temporary relaxed regulations can continue based on positive evidence during this time.
7. Be transparent to honor intent – Recommendation: Create a public-facing dashboard to show how nonprofits, small businesses, and local governments are benefiting from CARES dollars through the SBA, PPP, and EIDL programs and also from the $1.25 billion in state relief funds.

This information is not intended as legal advice. It is current as of April 29, 2020.

Tips for borrowers:

1. Keep clear and thorough records of both the receipt and expenditure of all PPP and/or EIDL funds.

• • Track PPP and EIDL funds separately. Note, they cannot be used for the same expenditures. (For example, you may use them both for payroll, but for different employees, or over different time periods.)
  • Record funds as a loan until any applicable forgiveness has been awarded.
  • Separate all PPP/EIDL expenditures into their own category/class/job. This will allow for easy reporting when it comes time to file the necessary paperwork for loan forgiveness.
  • There is talk of legislation requiring an audit for borrowers receiving more than $2 million. Nothing has been finalized regarding audits, but it is one more reason to keep clear and distinct records for all PPP and EIDL funds.

2. The guidance on PPP forgiveness is still being written by the Small Business Administration; there are no answers yet to many forgiveness questions.

3. Stay in touch with your lender if you intend to apply for forgiveness. The SBA will rely on lenders to facilitate the forgiveness process using guidance now being written by the SBA.

4. If you received both a PPP loan and the EIDL advance, the amount of the PPP loan that could qualify for forgiveness will be reduced by the amount of the EIDL advance. (Example: You received $50,000 in PPP funds and a $5,000 EIDL advance. Only $45,000 of the PPP loan will be considered for forgiveness.)

5. There are no pre-payment penalties for either loan program. If you find you will not need all the loan funds or are unable to spend them within the 8-week period (PPP) to be eligible for forgiveness, you may repay the funds not needed or used.

You can find more information at the links below:

Department of Treasury: PPP Borrowers Info Sheet

Department of Treasury: PPP Borrowers FAQ

SBA: EIDL Information

The Department of Revenue is waiving normal fees for Biennial Reports required of all Alaska entities every other year.  If your organization is currently out of compliance or are required to file your report in the next 60 days, you can log in to the State of Alaska Department of Commerce website and register for two years for free.  Here are the instructions:

1. Go to the State of Alaska Department of Commerce website
2. Click on Entities
3. Enter your name under the Entity box
4. Your Entity Number will be referenced – double click on it.
5. The Certificate will say whether your biennial report is due.
6. Click on “File Biennial Report” and fill out the forms.
7. There are no charges at this time.

Congress is getting ready to appropriate additional funds to the popular PPP and EIDL loan programs. If your organization has not already applied, you’ll want to be ready for the next round because funds will run out quickly. If you need help preparing – contact us.

Steps you can take now to be ready to apply for the PPP:

• Contact your lender immediately to let them know you intend to apply. If there’s a waiting list, get on it. If you can’t reach your lender or they are not offering the loans, try a different lender or one of the online lenders (see list below). This can be a frustrating step. Don’t give up!
• Ask for approval from your board to accept the loan(s). Let the board work on this while you work on the application so you’re ready to accept the loan when it comes.
• Preview the loan applications.
• Ready your documentation. Your lender will ask you for documentation. Some lenders may ask for different documentation than others. Try to be ready with everything so the application process can proceed as quickly as possible. You may need:
  • EIN, articles of incorporation, bylaws
  • Balance sheet/profit and loss sheet
  • Quarterly reports
  • Items to document payroll costs. Many lenders prefer using your payroll costs from 2019 as shown on IRS forms 941, 940 and W3. Be sure to include all allowable payroll costs:
    • Compensation (salary, wage, commission, or similar compensation, payment of cash tips)
    • Payment for vacation, parental, family, medical or sick leave
    • Allowance for dismissal or separation
    • Payment for group healthcare benefits including insurance premiums
    • Payment of any retirement benefit
    • Payment of state or local tax assessed on the compensation of employees
    • Note that only payroll cost for employees based in US may be included. And only the first $100,000 of an employee’s cash compensation may be included.

Preparing for the EIDL

As soon as the application opens, you must go to the SBA website to apply (not to a lender).

You will be asked for:

• Gross revenues for the 12 month prior to the date of the disaster (January 31, 2020): This number will be on your annual income statement.
• Cost of goods sold for the 12 month prior to the date of the disaster (January 31, 2020): If applicable, this number will be on your annual income statement.
• Compensation From other sources received as a result of the disaster: list any grants received

Other Tips for Applying

• During and after the application process, keep good documentation of the process. Write down all loan numbers, names of representatives you worked/spoke with, keep all related emails, etc.
• Ask your lender what documentation they will ask for to approve loan forgiveness.
• Ask your lender when you will find out about approval and distribution of funds.
• Work with your financial team to set up clear record keeping to track receipt and use of all funds received. (You may apply for both loans. You may not use PPP and EIDL funds for the same expenses. For example: you may use both funds for payroll, but not for the same employees during the same time period. Pay Jane with PPP funds in May/June, use EIDL funds in July.)
• Don’t assume you are ineligible, apply and work with the loan officers to confirm eligibility.
• Watch out for scams related to these loans.
• Remember these are new loans, and the regulations are literally still being finalized.
• Be persistent, don’t give up!
• Be patient, this can be a frustrating process, but your mission and your organization will benefit from your effort.

Accessing the Loans

You must apply for the PPP through an approved lender, this includes:

• Local and national banks and credit unions
• PayPal
• Square
• Kabbage

Overview of the loans

Paycheck Protection Program Loan:

• Apply through an approved lender – see a sample application here
• Loan amount is equal to 2.5 times average monthly payroll costs.
• Loan is forgivable if at least 75% of funds are spent on payroll within 8 weeks of disbursement and employee levels are maintained at February 15, 2020 levels
• Funds may be spent on:
  • Payroll expenses
  • Rent or lease or payment of mortgage interest
  • Utilities
• Funds not forgiven are a loan with:
  • • 1% interest rate
    • 2-year maturity date
    • First payment deferred 6 months
    • No prepayment penalty

EIDL Loan and EIDL Advance:

Apply through the SBA website

• EIDL loan
  • Up to $2,000,000
  • 2.75% interest rate for nonprofits
  • 30-year term
  • Payments deferred for 1 year
  • Apply on SBA website and wait for a SBA representative to contact you
• EIDL advance
  • Must apply for EIDL and check box that you would like the advance
  • Up to $10,000, $1,000 per employee
  • Fully forgivable even if borrower is not ultimately approved for EIDL loan
  • No notice of advance, funds will be deposited by Treasury into your account

Many lenders stopped accepting applications when the initial round of funding ran out. As soon as congress appropriates additional funding, lenders may submit new applications to the SBA.