Federal government to provide loans to nonprofits to mitigate pandemic impact
March 16, 2020; WPLG-TV (Miami, Florida)
In light of the growing effects and magnitude of the recent COVID-19 pandemic, the federal government will provide loans with an interest rate of 2.75% to nonprofits that are affected. This news was announced yesterday by the Miami-Dade Beacon Council, a public-private partnership located in Miami-Dade County, Florida. This organization is an outgrowth of the Greater Miami Chamber of Commerce.
Beacon Council executive vice president of economic development James Kohnstamm said affected nonprofits can receive funds through the Economic Disaster Lending Assistance Statement released by the US Small Business Administration on Thursday, March 12, 2020. These funds were entered in the Supplementary Appropriations Act on Coronavirus Preparedness and Response.
SBA Administrator Jovita Carranza released the statement, indicating that the SBA will work with state governors to provide these loans, as well as to help small businesses through their distraction offices. The declaration also included “private non-profit organizations in designated areas of a state or territory.” In the case of Florida, the SBA’s Disaster Assistance Bureau will work with Governor Ron DeSantis (R) to make these loans available. This program will provide up to $ 2 million to help a small business or non-profit organization. Each loan can be used “to pay off fixed debts, payroll, accounts payable and other bills that cannot be paid due to the impact of the disaster.” The SBA also states that the loans will have the option of long-term repayments up to a maximum of 30 years so that payments are affordable, and that the payment structure will be “determined on a case-by-case basis, based on capacity. to pay from each borrower.
The SBA’s Region IV office is located in Atlanta, and in addition to his partnership with Governor DeSantis in Florida, he will also work with the governors of Georgia, Kentucky, Mississippi, North Carolina, and North Carolina. Tennessee to provide assistance with SBA loans.
In the days, weeks and months to come, we will undoubtedly see the roll-out of stimulus measures and additional programs to help businesses and nonprofits. It should be noted that although the SBA offers loans to nonprofits (2.75%) at one percent less than what is offered to small businesses (3.75%), we should consider this in a larger context. The COVID-19 pandemic and economic fallout could be far worse than the 2008 recession, in addition to which nonprofits will be stretched to their maximum capacity as they step in to deal with the ensuing humanitarian crisis. . When the markets collapsed in 2008, the Federal Reserve was able to mobilize a lot of liquidity and loans at very low rates (in some cases 0% interest). While the scope and specifics of a global recession due to COVID-19 would be different from the 2008 crisis, we have already seen the Fed inject $ 1.5 trillion into the stock market. The point here is not that this is necessarily transposable to the small business and nonprofit sector, but simply to indicate that when the Federal Reserve, or the federal government for that matter, wants it, they seem to have the means to make certain things happen.
In the case of small nonprofits, which are likely to be pushed to a high point of stress as a result of the need that will emerge from such a global crisis, the federal government will need to do more than offer low rate loans. interest. While these loans are a good first step, grants should be made available to nonprofits and small businesses as they will be hit hardest by the pandemic. Time will probably tell and it is possible that more will be offered as we gain more clarity on the seriousness of these areas. — Kristen Munnelly