Volunteer Departments Eligible for CARES Act Loan Programs

The IAFC Economic Task Force was established by Chief Gary Ludwig, IAFC president and chairman of the board, to start evaluating the financial impact of the coronavirus pandemic on the fire and EMS community. The task force is actively working with IAFC staff and the Coronavirus Task Force to identify best practices as well as funding opportunities especially from the first of what we expect to be multiple federal stimulus packages. Already some funding opportunities have been identified that would benefit fire and EMS agencies that have non-profit status, particularly our volunteer organizations.

Under the CARES Act, all "private non-profit organizations" are eligible for purposes of the Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) program, including any entity exempt under IRC 501(c). As such, volunteer departments with IRC 501(c)(3) or IRC 501(c)(4) status can go online and apply for an emergency EIDL grant that is an advance of $10,000 to small businesses and non-profits that apply for SBA's EIDL program. The advance will be provided within three days of applying for the loan, and organizations will not be required to repay the advance, even if they are denied for an EIDL.

If approved, EIDLs provide up to $2 million for working capital, have a 2.75% interest rate for non-profits, and can be repaid over 30 years. EIDL loans may be used to pay fixed debts, payroll, accounts payable and other costs, but are not intended to replace lost sales or profits and cannot be used for certain purposes, including to refinance debt, make payments on loans owed by another federal agency, to pay tax penalty obligations, repair physical damages, or to pay dividends to stockholders.

Volunteer departments organized as a private non-profit [IRC 501(c)(3), IRC 501(c)(4) and IRC 501(c)(19)] that pay firefighters are also eligible for the Paycheck Protection Program (PPP). This SBA loan is designed to provide a direct incentive for small businesses and non-profits to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. Volunteer departments who qualify can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.

The PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments, if not forgiven, will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses or non-profits any fees. More information from the Economic Task Force will be forthcoming. Please continue to check iafc.org for daily updates.

CARES Act Guide for Small Businesses (PDF)
COVID-19 Resources

Gary Ludwig is IAFC president and chairman of the board. Steve Pegram is chair of the IAFC Economic Task Force.

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