The Small Business Association (SBA) is still accepting applications for Paycheck Protection Program (PPP) loans from participating lenders one week after resuming the program but it’s unclear how long that funding will last.

The PPP, funded through the CARES Act, provides forgivable loans to small businesses and nonprofits that keep their employees on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. The first round of funding, made available on April 3, highlighted some of the barriers facing nonprofits in accessing this capital. Most small and mid-sized nonprofits don’t have lines of credit or existing relationships with banks which slowed or complicated the loan process, among other factors. Ahead of the release of a second round of funding last week, CMF, in partnership with the Michigan Nonprofit Association (MNA) and the Small Business Association of Michigan (SBAM), launched a focused effort to ensure nonprofits in need are able to access critical support.

“Michigan’s economic recovery depends on nonprofits and small businesses accessing the capital they need to weather this storm,” Donna Murray-Brown, president and CEO of MNA said. “We are grateful to the Council of Michigan Foundations and the Small Business Association of Michigan for working together with Michigan Nonprofit Association to ensure Michigan gets its fair share of government assistance programs provided in the CARES Act. By joining forces, we were able to build awareness and provide technical assistance about the PPP program.”

A number of CMF members are joining in a strategic rapid response effort to support MNA’s efforts to increase access to funding. MNA is standing up new resources and services that will help charitable nonprofits effectively explore the next wave of funding through the PPP. CMF has encouraged members to reach out to their nonprofit partners in need to alert them of the available federal support and tools to navigate the loan process. MNA shares that effective messaging to reach nonprofits in need is crucial so they are also partnering with New Michigan Media (NMM) to help amplify communications.

“NMM is the network of ethnic and minority media in the state," Murray-Brown said. "Given that small businesses and nonprofits are the heart of minority communities, and are most in danger of going out of business or reducing services during this crisis, NMM has worked tirelessly to increase awareness and knowledge of the PPP to minority-owned businesses in the state.”

An important component of the second round of PPP funding included the allocation of $60 billion – out of the $310 billion total package – for community banks and smaller lenders, including community development financial institutions (CDFIs).

In Nonprofit Quarterly, Joe Neri, CEO of IFF, a Chicago-based CDFI which serves Michigan wrote about the challenges with the loan process through the lens of racial equity, calling for financial institutions to step up and ensure access for new clients and businesses owned by people of color.  

Neri explains that IFF made departures from its normal decision making by participating in the “working loan” PPP program.

“By asking ourselves who would be harmed by staying away from PPP, we realized that the very places we serve—smaller nonprofits, many of which are led by people of color—would be most hurt because they would have the most difficulty with the traditional banking system. We decided we had to promote the Paycheck Protection Program in some way,” Neri wrote.

One of the tools MNA has developed to help nonprofits is the Navigator Tool which mirrors the PPP application and provides additional guidance including a fact sheet, examples and frequently asked questions. Users can export their responses as a reference to facilitate the completion of the formal application submitted to their lender of choice. 

In addition to promoting the PPP among nonprofit partners and working to support engagement through the collaboration of MNA, CMF and SBAM, several CMF members around the state have launched nonprofit loan programs to help fill gaps.

Through the support of the W.K. Kellogg Foundation, Battle Creek Unlimited has established a $250,000 emergency microgrant fund for small businesses and nonprofits. The organization shares that priority will be given to nonprofits whose mission serves children, women and people of color.

The Ann Arbor Area Community Foundation launched its Short-term Cash Flow Loan Program for local nonprofits. The loans, up to $50,000 for each organization, focus on helping nonprofits meet up to 180 days of operational cash needs “to bridge nonprofit operations through this crisis and to reliable revenue sources.”

The Bay Area Community Foundation recently launched a Nonprofit Operating Support Loan Program for nonprofits in Bay and Arenac counties. The two-year loans will have 0% for the first year and 1% the year after with loans up to $20,000 to each nonprofit.

Other community foundations throughout the state are also exploring cash flow loans for local nonprofits, including leveraging Program Related Investments (PRIs). CMF invites members to share ways they are supporting nonprofits and small businesses at this time, please connect with us.

Want more?

Access MNA’s PPP Navigator Tool.