Churches can now apply for federal loan assistance to pay short-term employee salary costs and certain other church operating expenses under a "Paycheck Protection Program" approved in the recent massive COVID-19 legislation called the CARES Act, the $2 trillion stimulus package.
The new Paycheck Protection Program could help keep current staff in place and operations happening at a time when many churches experience reduced cash flow without regular gatherings for worship and congregational offerings. A qualifying church must have fewer than 500 employees and been harmed by the pandemic between February 15, 2020 and June 30, 2020.
Administered by the U.S. Small Business Administration (SBA) through local financial institutions, the plan requires small businesses and non-profits such as churches to fill out applications and provide financial data and certifications to qualify. Total loans may equal up to two and a half times a church's average monthly payroll costs over the past year. During the 8 weeks after a loan is granted, expenses churches incur that are eligible for assistance include payroll costs (salaries and benefits), interest on mortgages, rent, interest on debt, and utilities.
More details are here>>
Loans, which are unsecured, are for two years at 0.5% interest. If the church meets certain conditions about how the loan funds are used, the loans can be converted into grants, meaning repayment would not be required.
The focus period for the program is narrow-only February 15 through June 30 of this year. Congress could decide to extend that period if the coronavirus impact continues, but there is no guarantee as of now. Churches should move soon to look into the program if they are interested. Churches with associated day care, pre-school or school facilities should pay extra attention to details regarding those employees and costs.
Like all new government programs put together quickly, some key details are still unclear and may need time to resolve. Churches interested in exploring the Paycheck Protection Program should contact the local financial institution they already have a relationship with to see if that institution has been authorized to provide loans under the program, or to help find a list of local qualified lenders through SBA. Churches also should consult with their legal and financial advisers and follow their own approval rules before entering new loan agreements. [The presbytery can provide overall guidance but cannot provide specific financial or legal advice to its churches.]
Other provisions of the massive CARES Act may be relevant to churches.
Download a free overview of the CARES Act>>
Presbytery of the Miami Valley