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Nonprofits seek ‘Paycheck Protection’ loans, but worry about equity

Some have received help from the federal loan program, others are still waiting.
Claudia Fernandez, left, a puppeteer with Champions for Children, introduces "Sabrina" to a child during a 2017 event to raise awareness of child abuse in Florida. The puppets are used to educate children on the four kinds of child abuse. Champions for Children, a Tampa nonprofit, recently secured a loan through the federal Paycheck Protection Program to help prevent layoffs during the coronavirus crisis.
Claudia Fernandez, left, a puppeteer with Champions for Children, introduces "Sabrina" to a child during a 2017 event to raise awareness of child abuse in Florida. The puppets are used to educate children on the four kinds of child abuse. Champions for Children, a Tampa nonprofit, recently secured a loan through the federal Paycheck Protection Program to help prevent layoffs during the coronavirus crisis. [ DOUGLAS R. CLIFFORD | Times (2017) ]
Published Apr. 29, 2020

As local nonprofits wait for COVID-19 relief in the second round of the federal government’s Paycheck Protection Program, many are hoping the process will work better this time.

The loan program’s first round was hampered by a pool of money that quickly ran dry and rules that didn’t seem to align with how nonprofits operate, leaders of the groups said.

Related: RELATED: $310 billion more in paycheck protection loans still unlikely to meet demand

Edie Dopking, chief executive officer of Quantum Leap Farm, said her organization, which offers equine therapy, applied for one of the loans on April 6 through Truist Bank, but was told the bank ran out of funds on April 5.

“We’ve got our fingers and toes crossed for this second round,” she said.

The Nonprofit Leadership Center of Tampa Bay received $80,000 from the program, but CEO Emily Benham said the application required a flurry of documents and was not designed with nonprofits in mind.

For example, it asked organizations to list their owner, she said. “Who owns a nonprofit? The community?”

Benham said she’s grateful her organization received the loan, but is worried that smaller and minority-focused nonprofits will lose out because they lack existing relationships with the bankers approved by the Small Business Administration to dispense the loans.

About $60 billion of the additional $310 billion in the next pool has been set aside for smaller bankers to address that issue, but it remains a concern, nonprofit leaders say.

“It seemed like it depended on the kind of relationship you had with the bank,” said Marlene Spalten, chief executive officer of the Community Foundation of Tampa Bay, which works to fund nonprofits through grants, endowments and other initiatives.

“If you were a borrower, you’d go to the top of the list. That’s a Catch-22," she said. "Most nonprofits don’t borrow money. They live on what they get.”

Some banks, she’s heard, were better prepared than others and moved more quickly.

At Truist Bank, Paycheck Protection Program applications "were handled without preference for larger or more affluent clients,” bank spokesman Kyle Tarrance said.

Bankers have been responsive, answering emails at 12:30 a.m., said Dopking, the Quantum Leap Farm leader. She also said the process was straightforward, though she worried for smaller nonprofits who may have struggled to produce all the documentation quickly enough.

She said she hopes her organization will qualify during the second round because there’s no operating revenue coming in and the horses they keep still need to be cared for. About half the group’s revenue comes from three fundraisers that may or may not be held, depending on how long social distancing is necessary, Dopking said.

“We’re not on the front lines of fighting this pandemic, but we do address a lot of important issues facing this community,” she said.

“A lot of people view cultural organizations as nonessential, but for a vibrant community you need these places,” said John Bell, chief executive officer of the nonprofit Tampa Theatre.

Bell said he has heard of many other historic theaters around the country that did not qualify for the first round of the Payroll Protection Program.

The theater submitted its application on the first day, he said, but the guidelines kept being revised and they had to keep updating it. He said his chief operating officer compared it to “playing a game without knowing the rules until halfway through.”

Tampa Theatre’s $260,000 loan came through the Bank of Tampa, where the theater had existing accounts. Like others, Bell said those with connections to local and regional banks seemed to fare better.

The Paycheck Protection Program offers a provision that allows loans to be mostly forgivable if used for payroll, mortgage, utilities and interest. They are calculated using 2.5 times a nonprofit’s average monthly payroll. The terms require that no layoffs occur during the eight-week period starting from the date the loan was issued or that those laid off are rehired before the end.

Payroll is capped and prorated for any individual earning above $100,000. Conditions for loan forgiveness, however, are still being revised.

According to the Small Business Administration, nearly 89,000 Florida loans were approved through the program as of April 16, for a state total of $17.9 billion. The agency has yet to release a detailed list of recipients.

Nonprofits are competing for the money alongside a wide range of businesses, from manufacturers and construction companies to real estate firms, food suppliers and retailers.

The nonprofit Poynter Institute, which owns the Tampa Bay Times, received a $737,400 loan through the program. The Times, a for-profit company, received $8.5 million.

Amy Haile, chief executive for the child abuse prevention nonprofit Champions for Children, said her organization received $975,000 in PPP money through Regions Bank.

Many nonprofits, she said, were leery of applying for a loan.

“Where would you get $1 million to repay as a nonprofit when revenue is cut?” she said. “That’s the bit that’s a bit uncomfortable for me. They’re building this plane as they’re flying it.”

Still, she said, it seems straightforward because the program’s goal is to keep people paid and headcount the same. Her organization was looking at possible layoffs before they found out about the loan.

“We can all exhale,” she said.

Related: RELATED: Tampa Bay Times gets federal loan to help with revenue losses caused by pandemic
Related: RELATED: Coronavirus leaves Tampa Bay nonprofits hurting for funds

Spalten, the Community Foundation leader, said she hopes nonprofits are able to stay fully staffed.

“If people can’t have the services that nonprofits provide, then they spiral down even further,” she said. “Nonprofits are bumpers along the way down the slide. Those bumpers can stop the descent and get you back on your feet again."