Paycheck Protection Program: FAQs from the NFF Community

March 18, 2021

Over the past several months, we’ve received some excellent questions from the NFF community about applying for Paycheck Protection Program (PPP) loans. In this blog post, we do our best to answer some of the most commonly asked questions. 

For more information about PPP funding, check out this blog post and the recording and slide deck from our recent PPP webinar.  

Our next webinar – offered on two different dates – will focus on PPP loan forgiveness. Sign up for the April 7 session here and the April 19 session here

How do I apply for a PPP loan?

Instead of applying for a PPP loan directly from the United States Small Business Administration (SBA), you apply through a bank or community development finance institution (CDFI). You can find PPP lenders through these lender locators offered by the SBA and Opportunity Finance Network. First draw borrowers should use this SBA form; second draw borrowers should use this one. 

How do I check on the status of my PPP loan or forgiveness application?

Your lender – not SBA – will be the main point of contact for your PPP loan and forgiveness applications. 

Can I apply for a PPP loan from multiple lenders?

You can submit PPP applications to multiple lenders. However, you are only eligible for one PPP first draw loan and one PPP second draw loan. 

When calculating gross receipts, can we take out one-time grants related to COVID-19?

It depends on the nature of the grant. Forgiven PPP loans and Economic Injury Disaster Loans (EIDL) advances do not need to be included when calculating gross receipts. Other grants may need to be counted. We recommend checking with your accountant or lender to determine which funding, if any, should be excluded from gross receipts. As a general rule, any gross receipts that would show up on your 990 should be included in your PPP application. 

Would a nonprofit include in-kind contributions when calculating gross receipts?

Donated goods are treated differently from donated services when calculating gross receipts: donated goods are included at their fair market value at the time of the donation, while donated services and donations of use of facilities are not. The IRS has a bit more about this on pages 37-38 of their 990 instruction form. If you have noncash contributions that would be included in your 990 in Part VIII Statement of Revenue on line 1g, they are counted in your overall gross receipts for the IRS and for the PPP application. Any in-kind use of services or facilities would not. 

What about endowment funds or insurance payouts?

If you include them in your 990, include them in your PPP application. 

If we used 2019 payroll costs to determine the amount we applied for in the first draw, should we use them again to calculate the amount for our second draw loan?

SBA has updated their application forms with instructions that allow you to use either 2019 or  2020 payroll costs to calculate your loan amount. You have the option to use one or the other. 

For second draw, what two points in time will the SBA look to in order to calculate if the number of full-time employees was maintained?

There are two reference periods you can use: Feb 15, 2019 to June 30, 2019 or January 1, 2020 to Feb 29, 2020. If you are a seasonal employer, you can use any consecutive 12-week period between February 15, 2019 and February 15, 2020. 

I’m applying for a loan of less than $150K. Is it true that less documentation is required for a loan of this size?

SBA does not require that you submit documentation for loans of $150K or lower to have that loan be forgiven. However, they reserve the right to request that information at any time, so you should have it on hand even if you don’t include it in your application. 

You are required to verify your information, to retain your payroll records for four years, and to retain other records like utility bills for three years. The application requires that you state the "Employees at time of loan application" – the total your organization had when you submitted your PPP application – and "Employees at time of forgiveness application" –  the total your organization has when you submit for forgiveness. So rather than referring back to your staffing numbers from any calendar year, they are just asking you to provide the totals for the day you applied for PPP and the day you apply for forgiveness. SBA has put together a form called 3508S for loans of $150K or less which you can find here, but check with your lender to see if they are using their own version. 

My nonprofit had to purchase special equipment to shift programs from in-person to online. Can this expenditure be covered by PPP funding?

Special equipment probably won’t be covered by the PPP, unless it is directly related to COVID-19 safety (PPE, cleaning supplies, etc.). Double-check with your accountant or lender just to be safe. 

Some of my organization’s staff have salaries funded by other grants. Should I count those when calculating average monthly payroll expenses for this application?

Like with any other funding source, you will want to be mindful of avoiding "double-dipping" in terms of how dollars are applied. If you have positions on your staff that are fully or partially funded by grants, you should spend PPP dollars on other positions or eligible payroll expenses not covered by your grants. SBA is defining eligible payroll expenses as: gross wages and tips; employer group health, life, disability, vision, and dental insurance contributions; employer retirement contributions; and state and local taxes assessed on employee compensation. If any of those expenses are not covered by other grants, you may use PPP funds on them. Likewise, if you have employees whose salaries are not 100 percent covered by your grants (for example, a grant that covers 50 percent of a particular position's salary) the balance that is unsupported can be covered with PPP dollars. 

I represent a small nonprofit that does not currently have paid staff. Am I eligible for the PPP?

It depends. If your staff were formerly paid but sacrificed their salaries once COVID-19 hit, you would be eligible for a PPP loan. When calculating average payroll costs for the year, you may use either 2019 or 2020 payroll; if staff sacrificed their salaries in 2020 due to the pandemic, you would have a lower payroll cost (and lower total eligibility amount) if you used the 2020 figure. If you did not have paid staff in either 2019 or 2020, you would not be eligible for a PPP loan. 

Furthermore, if your organization received a PPP loan, you would need to apply that funding towards the salaries of your employees. If you laid off employees, you would need to attempt to offer those people their jobs back and document this process. If a former employee declines the rehire, then you would be free to post the position and hire someone else.

Do you have any more information about loan forgiveness?

We will host a webinar about loan forgiveness for nonprofits in April. You may sign up for the April 7 session here and the April 19 session here. We’ll update this blog with more information about loan forgiveness closer to the date of the first webinar.  


Join over 24,000 social sector leaders who receive our latest insights and noteworthy stories throughout the year.