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Helps relating to the Paycheck Protection Program (PPP) offered to churches and nonprofits

Church and Partner in Ministry,

Below is designed to be a brief outline of helps relating to the Paycheck Protection Program (PPP) offered to churches and nonprofits pertaining to the recently signed CARES Act or Coronavirus Aid, Relief, and Economic Security Act. The PPP is an economic relief stimulus package for small businesses, churches, and nonprofits. There are three main provisions in the CARES Act. They are direct stimulus payments to individuals, enhanced unemployment provisions, and the Paycheck Protection Program. Provided in this email are two main items: 1) Links to helps and information on the stimulus package, and 2) Information to consider when choosing to apply for the PPP loan.

There has been a good bit of information already compiled on the CARES Act and how this applies to churches and nonprofits. Below are a few good resources to gather information for your church. The information that does not seem to be out yet are the specifics of the application process and the documentation required in order to obtain loan forgiveness of the PPP loan. The subsequent section of this email details the loan calculations and application process to the best of our knowledge.

Resources provided by reputable sources:

Great overview Synopsis:

Church Law & Tax overview:

As questions arise and are asked to Church Law & Tax, the answers can be found at this link:

Church Law & Tax updates on stimulus:

GuideStone Financial Resources Q&A on CARES Act:

PPP Fact Sheet:–Fact-Sheet.pdf

Department of Labor Employee Rights Coronavirus workplace poster:

New required posting in the workplace.

Applying for the Loan:

This loan is provided by the Federal Government to small businesses including ministries and churches. Our understanding of this stimulus option through the Federal government is ultimately to get money into the hands of employees to keep money injected into the economy and prevent a larger economic crash.

It is important to note that this is a loan and should be treated as such. Church boards, leadership teams, and/or congregations should vote on obtaining a loan as indicated in your church’s organizational documents. The application for this loan will not require the backing or co-signing of any individual connected with the organization and there will be no origination fees. The maximum loan amount a church can apply for is 2.5 times the average monthly payroll cost averaged over the past twelve months. We interpret payroll costs to include salaries (up to $100,000 annualized), employer group health and life benefits, employer group retirement benefits, and payments to individuals as 1099-MISC recipients. The loan amount may only be calculated based on payroll costs; however, the loan can be used for payroll expenses (as defined above), mortgage or rent payments, and/or utilities costs. The cost of mortgage, rent, or utilities may not be added into the loan amount to make it larger than the defined 2.5 times average monthly payroll costs.

Loan forgiveness option:

This loan can become a grant approximately eight weeks after receipt of the loan funds by meeting the criteria of loan forgiveness. The criterion for meeting loan forgiveness falls on maintaining the same number of Full-Time Equivalent Employees (FTEs) as defined by the Internal Revenue Code of 1986. The period of review will be February 15, 2020 through June 30, 2020 compared to the number of employees for the same period in 2019.

How churches can apply for PPP:

Churches should start by contacting their bank. Many larger banks are being authorized by the government to offer these loans. In the coming days, banks will have the needed information and application processes in place to apply, some as early as April 3. Some banks are already gathering information from interested churches and will reach back when they are ready to begin the application process. The application that is posted on the IRS website is a short two page application but it is likely that after the loan is applied for that the lender will ask for information such as: Full-time Equivalent Employee calculations, 941 Federal payroll filings, State payroll filings, payment invoice records for health insurance premiums/life insurance premiums, retirement payments, and other pertinent payroll expense records. Should this info not be provided in its entirety then a portion of the loan shall remain as a loan and not be forgiven.

Sample application for loan and determining loan amount link:

Find a Local SBA Office for questions:

This is our effort to provide helpful information to churches and nonprofits regarding the PPP of the CARES Act. Not all details have been outlined, and we recommend each church spend time researching and evaluating this program prior to implementation. There is a chance that funds will run out if small businesses and churches/nonprofits apply for all the available funds.

**This document is not intended to present legal advice on this topic and should not be interpreted as such. Any content in this document may not be used for the avoidance of any fees, penalties, or fines imposed by the Federal government, SBA, or other governing agency. For legal advice on the matter please seek the counsel of the, an approved lending bank, or a knowledgeable tax accountant.**

We hope this information is helpful to your ministry! Thanks for all you do for the Kingdom!

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