You may have already heard that on March 27, President Donald Trump signed the “Coronavirus Aid, Relief, and Economic Security Act” (the CARES Act) which provides an estimated $2+ trillion in federal aid programs. Of this amount, $349 billion has been earmarked for the “Paycheck Protection Program” which will offer loans to small businesses including nonprofits and churches. This program will be administered by the Small Business Administration (SBA) which will use local branch banks as servers for the loan applications. Under this program, the loan amount is 2.5 times the amount of the average monthly payroll for the 12-month period between March 2019-February 2020. And the best news is this loan may be 100% forgivable if you satisfy the criteria.
We have a dedicated task force that has been working to discern the provisions of the program and how the application process will work within the context of our structure. There seems to be some misinformation and speculation floating around in a few ministry blogs and publications, so our team is working hard to separate fact from fiction and provide you with accurate data about the important considerations, availability and necessary process to obtain these loans.
Here are the steps and associated resources for the loan application and forgiveness process:
Calculate current payroll costs and loan eligibility.
Download the Excel file now
Identify an SBA approved lender.
To find a lender contact your local bank or visit the SBA PPP website
Compile the required documents for the application packet.
Click for a list of documents
Submit application, spreadsheet and payroll documentation to an approved lender.
Apply for PPP loan forgiveness with your lender.
(pending instructions from SBA)
Click for a list of resources
Foursquare ministries can apply, but please note this is a federal loan program that has never been done. This program is through the Small Business Administration (SBA). As such, the SBA is not accustomed to dealing with churches. There is the possibility that the SBA or the lenders they and your church use may not understand certain things. There are unknowns and there are risks you must be aware of:
- Foursquare Polity: The SBA has a definition of “affiliates” which has been in existence and applies to for-profit businesses. We do not know how the SBA or its lenders will view Foursquare’s polity and whether our churches would be considered affiliates. Under the SBA definitions, we believe our churches are not “affiliates” with each other and can apply individually on their own. We cannot guarantee that SBA or your lender will agree, but our best advice is to check “no” to question 3 on the PPP application. We recommend not bringing Foursquare’s polity/corporate structure to the attention of your lender or else they may instruct you to have the central office apply on your behalf.
- Tax Exemption: We have heard reports that lenders may reject applications from churches that do not have an IRS determination letter. Churches are not, by law, required to have anything from the IRS. Certain Congress members are trying to address this on behalf of churches. Additionally, Foursquare has a group tax exemption for our churches that we all share, which may also add to the confusion of lenders.
- Risks: There are risks because of the many questions the regulations do not yet address. The risks range from minor to significant. A minor risk, for example, is being denied; thus, a lot of work was done for nothing. A much greater risk is being required to immediately return money received or denial of all loan forgiveness because a local church was not eligible to apply.
Here are the most important things to know today:
- Banks will begin processing PPP loan applications as early as April 3. These loans are processed on a first-come, first-served basis.
- Most banks and credit unions will be eligible to provide PPP loans, but some banks may still be awaiting approval from the SBA to participate as a lender for this program.
- There are multiple programs and new laws to be aware of, so don’t get them confused: The Paycheck Protection Program (PPP) is different from the SBA Economic Injury Disaster Advance Loan program (EIDAL). As of the most current briefing, churches are not eligible for EIDAL, however there is conflicting information being circulated.
- In addition to the CARES Act program, there are new labor regulations with which churches must comply. You can obtain updated information about the CARES Act program and COVID-19 tax and payroll updates at Foursquare News + Resources.