If this pandemic and the government’s response to it have taught us anything it is the importance of being prepared. The Paycheck Protection Program while flawed in delivery, provided vital funds to nonprofits IF you were lucky enough to get your application in. The EIDL and Mid-Sized Loan programs performed slightly better. I have heard many stories from clients and colleagues of nonprofit entities who were not being able to get through to their bank, did not have the necessary paperwork ready, lacked the staff availability to process the applications and didn’t seek critical advice on what and how to apply.
3 quick tips that can be helpful as we await the next round of funding:
Sometimes smaller is better. The big banks seemed to have not really been prepared themselves for the onslaught of applications and did not serve their clients well. The big banks all had issues of varying degree setting up the application process and managing the volume. I know of one nonprofit that is in vital need of funding and had a dedicated staff person hitting submit all day while on hold. They never got through to speak to a person at their bank and the application submission came back with an error message saying it could not be processed, but no explanation as to what the error was. The application finally went through on the day the money ran out.
The smaller regional and community banks did much better. In some instances, applications were processed and money received in 3 days. In addition, payroll and other subscriptions companies like Quickbooks, Gusto and Divvy all were able to process applications for their clients.
While awaiting the next round of funding, nonprofits should explore other options so that you can ensure your application is ready. While it may be more difficult now, try to establish at least one other banking relationship with a smaller local or regional bank and check in with your other providers to see what services they are providing. Check to see which local banks are accepting new applications and set up a checking account or savings account with a portion of your funds. This is good practice in normal times too. It is always best to have multiple options.
Many smaller nonprofits struggled with the paperwork. While the applications were simple, in many cases, the follow-up required the standard banking and financial documentation used for loan applications. Now is the time to put together a package of information that can be used to access all types of financial relief that may become available in the coming months There will be more relief packages coming, and whether you are applying for government relief programs, grants, or even conventional bank loans, the documentation will likely be similar or the same. Take the time to put together a package of information that can be easily used to apply for financial relief. The information should include, at a minimum, copies of the following documents in PDF form that can be easily emailed or uploaded:
- Mission statement
- 501 (c) (3) certification
- 3 years of audited financials
- Annual budget and budget versus actual financial report for current year to date
- Last 4 months of bank statements
- Cashflow projections
- Contractual obligations
- Outstanding receivables
- Investment statements
- Insurance policies
- Lease obligations
- Payroll logs
Many nonprofits are short staffed and still trying hard to deliver on their programmatic initiatives. Having to dedicate hours filling out applications is not the best use of scarce resources. Assign one dedicated staff person to monitor the vast number of programs available for help. Create a standardized cover letter template and background information to easily replicate the information in the various applications. Foundation grant applications are labor intensive. Standardize as much as you can and ensure that you have at least one staff member up to date on all the various programs
Use this time to strengthen your organizational foundation
If you found your organization ill prepared to quickly jump into action to apply for the PPP Program you are not alone. Now is the time to put your organization in the best position to apply for what will likely be many more rounds of funding and other relief programs. If you are reliant on one bank for all your banking needs, establish a relationship with one more. If you don’t have any of the items on the list above – get them. If you don’t know how to go about applying – ask for help. The financial resources will be plentiful, so make sure your organization gets what it needs.