Private Schools Are Eligible for Federal Paycheck Protection Program (PPP) – Details

Covid-19 school closures have placed schools in the untenable situation of honoring teacher contracts, continuing to pay bills and maintenance costs, and providing resources for families with limited access to technology. Leadership teams face an unprecedented challenge in balancing not only a new educational norm of instructing in a remote fashion, but also maintaining operational vitality during at a time where fundraising capabilities have been crippled, many of their tuition paying families have experienced job loss, and the promise of a new class of enrollees for the upcoming school year is now in question. As school closures stretch into May and many states have canceled in-person classes across the nation, schools facing financial challenges and shortfalls must be aware of the opportunity to receive aid under the Paycheck Protection Program.
The Paycheck Protection Program, part of the federal relief passed by Congress, includes for-profit AND non-profit organizations with fewer than 500 employees. As long as the school maintains payroll for eight weeks, the loan will be forgiven. Private schools and faith-based organizations are eligible and should apply quickly.
It is important for school leadership to recognize not only their standing as an educational institution, but also as a small business. Any school organization with less than 500 employees, can get a “loan” from the government. The loans can be for up to 250% of an employer’s average monthly payroll. If the employer maintains its payroll for an eight-week period, the loan is forgiven. The loan can be used for payroll, interest on mortgages, rent and utilities—all of these costs will be forgiven. The maximum loan is $10 million.
As an example, if you are a school with 40 employees who are paid an average of $30,000 a year including benefits, you could receive a loan of $250,000, which will be forgiven if you keep all of your employees on the payroll for eight weeks after receiving the funds. For religiously affiliated schools, it is important to note that autonomy can be maintained by following the guidelines for loan forgiveness.
School leaders seeking further guidance on how to apply for funding need to understand that these loans are not with the SBA but with the banks themselves. If a private school is making plans to apply for a loan under this program, though not required, it is prudent to first contact the bank(s) with whom an existing banking relationship is in place and ask if that bank is participating in the CARES Act SBA loan program. While funds for the first round of the program have already been claimed, the second-round of lending resumes this week. Participating banks and lending institutions are standing ready to help applicants with any questions or other needs they may have.
Important Links:
For frequently asked questions and information regarding loan calculations click here
For questions regarding participation of faith-based organizations in PPP click here.
To find a participating lender click here.
For the Paycheck Protection Program application click here.


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