Volunteer fire departments are ineligible to obtain funds from the Economic Injury Disaster Loans (EIDL) program because of their dependence on bingo games and raffles for fundraising.
With the COVID-19 crisis destroying the ability of volunteer departments to raise funds, access to the EIDL program could provide needed assistance during a time of economic crisis. Under current rules, the assistance is unavailable.
Economic Injury Disaster Loans program
As the U.S. Small Business Administration (SBA) implements the EIDL program to support private entities reeling from the financial impacts of the COVID-19 pandemic, the government agency has deemed that entities (such as volunteer fire departments) are ineligible for assistance if they receive more than one-third of their revenue from legal gaming, which the Internal Revenue Service interprets to include bingo games and raffles.
“While this determination may not have been intended to preclude volunteer fire departments from receiving this critical assistance, many of the most acutely impacted private non-profit fire departments are unable to request the assistance that they desperately need,” according to the International Association of Fire Chiefs (IAFC).
Financial funding for private non-profit fire departments
In a letter, the IAFC has urged the SBA to adjust the EIDL assistance program in order to provide greater financial assistance to private non-profit fire departments.
In effect, the association of fire chiefs is asking the agency to exempt volunteer fire departments, recognized under Section 501(C) of the Internal Revenue Code (IRC), from the limit on legal gaming revenue.
“The unprecedented economic downturn and stay-at-home orders have decimated the ability of these agencies to meet their fundraising needs,” said the letter, adding “The IAFC urges the [SBA] to waive this requirement and support private nonprofit fire departments in their work to answer calls for emergency service.”
Over-reliance on volunteer personnel
According to the USFA, 70% of U.S. fire departments rely solely on volunteer personnel to respond to emergencies
According to the U.S. Fire Administration (USFA), 70% of U.S. fire departments rely solely on volunteer personnel to respond to emergencies. Located in rural communities with limited tax bases, these agencies rely upon community support to sustain their operations. The EIDL program is a mechanism to support private entities staggering from the financial impacts of the COVID-19 pandemic.
In late April 2020, the U.S. Small Business Administration (SBA) published an interim rule to waive the cap on legal gaming revenues for public entities seeking assistance through the Paycheck Protection Program. However, this change does not impact fire departments that utilize volunteers and own their property outright.
Economic Injury Disaster Loan facility
“The IAFC fears that these private non-profit fire departments may be unable to maintain their emergency response operations if a similar exemption is not also made for the EIDL program,” the letter further adds.
In response to the coronavirus (COVID-19) pandemic, small business owners and organizations in all U.S. States, Washington D.C., and overseas US territories are able to apply for an Economic Injury Disaster Loan advance of up to US$ 10,000.
This advance is designed to provide economic relief to organizations that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid.
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