CARES Act and Paycheck Protection Program

Paycheck Protection Program

What is the Paycheck Protection Program?

The CARES Act established the Paycheck Protection Program in 2020, allocating $660 billion in forgivable loans to help small businesses and nonprofits keep workers employed during this time. The program ended May 31, 2021. Existing borrowers may be eligible for loan forgiveness.

Frequently Asked Questions

Is this the same as the Economic Injury Disaster Loan Program?

No, the Paycheck Protection Program is not the same as the SBA's Economic Injury Disaster Loan Program. A nonprofit can apply for both loans and decide which to take if approved for both.

Under the Economic Aid Act, signed into law on December 27, 2020, advances received by a PPP borrower under an Economic Injury Disaster Loan will not reduce forgiveness payments by the SBA toward the borrower's PPP loan.

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Eligibility and Borrowing Guidelines

Nonprofits in existence as of March 1, 2020, or earlier, who met eligibility criteria as to number of employees for First Draw loans and eligibility criteria as to number of employees and reduction in gross receipts for Second Draw loans may have their loans forgiven, essentially turning the loan into a general operating support grant. Read more below under PPP loan forgiveness. View the Quick Reference Guide on Eligibility

Loan funds can be used for payroll, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

Safe Harbor Provision

The SBA has created a new, permanent "safe harbor" for all loans less than $2 million. These loans will rely upon your original good-faith certification of need. 

Loans over $2 million may be audited, requiring that borrowers demonstrate that the loan is necessary for ongoing operations. If the standard is not met, the borrower will be required to repay the loan, with no further penalties. 

For details regarding the new safe harbor provision, see question 46 in the Paycheck Protection Program Frequently Asked Questions or read this informative article.

PPP Loan Forgiveness

Applications and instructions for PPP Loan Forgiveness are available on the Small Business Administration website. A borrower can apply for PPP loan forgiveness once all loan proceeds have been used or until the maturity date of the loan; a borrower must apply before 10 months after the last day of the covered period defined by the loan.

First and Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8-24 week covered period following loan disbursement:

  • Employee and compensation levels are maintained as required,
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • • At least 60% of the proceeds are spent on payroll costs.

Small businesses have five years to pay back any portion that is not forgiven and loans carry a 1% interest rate. Loans may be forgiven even if the business is unable to rehire the same employees, or the same number of employees due to safety requirements related to COVID-19, or if employees request reduced hours to care for children or family.

FFTC tax and audit partner, Cherry Bekaert, offered a webinar in November 2020 on PPP loan forgiveness. Watch recording and read FAQs from the Small Business Administration.

Pandemic Unemployment Assistance Program

Who is eligible?

Employees in nonprofits with fewer than four employees, as well as churches, religious nonprofits and those self-employed who are out of work due to COVID-19, may now receive unemployment insurance benefits.

How much support can you receive?

Unemployed workers can receive an additional $600 per week for up to four months, in addition to up to $350 a week from current NC unemployment benefits or up to $326 a week from current SC unemployment benefits.

Does the program help nonprofits themselves?

Yes. The federal government will pay states to reimburse nonprofits for half of the costs they incur through December 31, 2020, to pay unemployment benefits.

How Can You Apply?

North Carolina: The Division of Unemployment Security at the NC Department of Commerce released helpful guidance on how to apply for benefits. NC Tip Sheet

South Carolina: The SC Department of Employment and Workforce released a tutorial on how to apply.

Charitable Giving Incentive

Encouraging Charitable Giving

The CARES Act includes three incentives to encourage charitable giving that apply in 2021:

  • A temporary universal deduction that applies to non-itemizing taxpayers for cash charitable contributions up to $300.
  • The existing cap is lifted on annual cash contributions for those who itemize, raising it from 60% of adjusted gross income to 100%.
  • For corporations, the law raises the annual AGI limit from 10% to 25%. Food donations from corporations are available to 25% of AGI, up from 15%.

While gifts to donor advised funds are specifically excluded from these enhanced charitable giving provisions, donations to other funds at community foundations such as Agency Funds, Field of Interest Funds like the COVID-19 Response Fund and other regional efforts are eligible, along with direct gifts to nonprofit agencies.

We encourage you to share these incentives with your donor base, and FFTC is also working to inform our constituents.

Additional Resources

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* Information provided is general in nature. It is not intended to be, and should not be construed as, legal or tax advice. Foundation For The Carolinas does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy or completeness of this situation.


Devire Robinson

Deviré Robinson, J.D.

Vice President, Philanthropic Advancement

Email Deviré