On May 14, 2020, the Center submitted public comments to the Small Business Administration (SBA) on its interim rulemaking on the Paycheck Protection Program (PPP). The Center's comments endorsed the more extensive public comments of the National Council of Nonprofits and addressed four specific issues that North Carolina nonprofits have had with PPP applications and loans:
- Eligibility. The Center asked the SBA to use its greatest possible flexibility to expand eligibility to nonprofits with more than 500 employees in a manner similar to the "alternative size standard" that it has applied to for-profit businesses. This would increase access to capital for larger organizations that are suffering economic harm due to COVID-19.
- Need for Nonprofit PPP Data. The Center has heard from many nonprofits that some lenders appear to have prioritized the PPP applications of for-profit businesses over those of nonprofits. If true, this is very troubling. The Center asked the SBA to publish data comparing the number of PPP applications, number of loans issued, and average loan amounts of nonprofit and for-profit loan applicants. It would be even more helpful if the SBA could publish this data by state so nonprofits and policymakers could assess whether there is inequitable treatment of charitable organizations in some or all states.
- Certifications. As the SBA has begun to provide guidance and government officials have made public statements about the certification of necessity, nonprofits are struggling to understand the evidence of economic distress they need to demonstrate to feel comfortable making this certification in good faith. The safe harbor for borrowers with loans of less than $2 million in Question 46 of the SBA’s Frequently Asked Questions is helpful for many nonprofits, but further guidance would be helpful for charitable organizations with larger loans.The Center asked the SBA to provide clearer guidance on the types of nonprofit-specific economic distress are adequate to make the certification of necessity in good faith. The Center also asked the SBA to be understanding that the vast majority of nonprofits seeking PPP loans are making this certification in good faith based on the best available evidence of actual or prospective economic harm due to COVID-19 and that nonprofits’ circumstances are evolving as the crisis and its impact continue to evolve.
- Need for Nonprofit-Specific Guidance. The Center encouraged the SBA to address nonprofit-specific questions in its final rulemaking and other future guidance on the PPP.