Baptist and Reflector

FRANKLIN — The Paycheck Protection Program (PPP), recently enacted by Congress as part of the $2 trillion CARES Act to relieve economic hardship caused by the COVID-19 pandemic, set aside $349 billion to guarantee loans to businesses employing fewer than 500 employees for expenses like payroll, utilities and rent or mortgage payments. 

Nonprofits, including Tennessee Baptist churches and other religious ministries, are eligible to receive funds covering up to 2.5 times their average monthly payroll, with a cap of $10 million per loan.

The U.S. Small Business Administration released its Interim Final Rule on April 2. The SBA wrote in its report:

“All loans guaranteed by the SBA pursuant to the CARES Act will be made consistent with constitutional, statutory and regulatory protections for religious liberty, including the First Amendment to the Constitution, the Religious Freedom Restoration Act, 42 

U.S.C. 2000bb-1 and bb-3, and SBA regulation at 13 C.F.R. 113.3-1h, which provides: ‘Nothing in [SBA nondiscrimination regulations] shall apply to a religious corporation, association, educational institution or society with respect to the membership or the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its religious activities.’ SBA intends to promptly issue additional guidance with regard to religious liberty protections under this program.

SBA may provide further guidance, if needed, through SBA notices and a program guide which will be posted on SBA’s website at www.sba.gov.”

A brief synopsis of the SBA report, compiled by William Maxwell, administrator, Tennessee Baptist Mission Board, follows:

• Churches, under 500 employees and in business prior to February 15, 2020, are eligible to apply for loans under the Payroll Protection Program (PPP)
• The PPP is being administered by the Small Business Administration (SBA) but the money is being borrowed from local banks that are approved SBA lenders. Not all banks are SBA lenders.
• Church can borrow up to 2.5 times their average monthly payroll costs (or $10 million whichever is lower). There are multiple items that can be included in this and some limitations.
• The loan funds can only be used for payroll costs, costs related to continuation of group health care. benefits, mortgage interest payments rent payment, utility payments, interest payments.
• TBMB recommends that churches establish a separate checking account for the loan funds to make the documentation of the expenses easier.
• The loan may be forgiven up to the full principal amount and any accrued interest based on the Church maintaining their level of employees. SBA is expected to provide additional clarification on the loan forgiveness.
• Churches should read carefully the certifications on the application to ensure that they can attest to the statements.
• There are some concerns that for churches with less than 15 employees, that the certifications will expose those churches to non-discrimination requirements not currently invoked.
• While the SBA has issued the rules and most banks began accepting applications on April 3, there is still uncertainty with various aspects of the program.
• Each lending institution has some leeway in the information they collect from the borrower. Churches should first direct their questions to their lending institutions.
• The loan will carry an interest rate of 1% with a payment deadline of two years.

Maxwell also observed that the North Carolina Baptist Convention “has developed a very informative page on how churches can access these loans” — https://ncbaptist.org/help-for-churches-navigating-the-cares-act/.

In addition, Maxwell suggested that churches apply for the loans as soon as possible.

Tennessee Baptists who have additional questions can contact Maxwell at [email protected].

GuideStone Financial Resources has updated its Questions and Answers page regarding the payroll protection plan. You can find the link at https://baptistandreflector.org/qa-how-churches-pastors-are-eligible-for-relief-in-stimulus-package/

B&R