As social distancing keeps church pews, meeting halls, synagogues and congregation centers empty for the near future, faith-based organizations are among the many employers looking for financial relief during COVID-19 pandemic.
After the release of the initial guidance from the U.S. Small Business Administration (SBA) around Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) eligibility, many religious organizations had more questions than answers. To help, the SBA issued additional guidance to faith-based organizations considering participation.
While available relief funds and application guidance is continuing to change and evolve, BPM encourages faith-based organizations to apply for relief opportunities, if eligible, especially now as the amount of funds available continue to evolve.
Here is what we know:
- Section 501(c)(3) nonprofit organizations and 501(c)(19) veteran organizations are eligible for PPP loans; religious organizations that qualify under the CARES Act are also eligible for SBA loans.
- Faith-based organizations that provide secular social services are also eligible to receive SBA loans.
- The 500-employee limitation also applies to religious organizations, because the SBA size standards table cannot determine PPP eligibility.
- Entities that are affiliated with other faith-based organizations (like a local diocese) must add up their employee numbers in determining whether they have 500 or fewer employees, according to SBA’s affiliation rules.
- The same spending limitations, including the 25% spending limit for non-payroll costs, apply to faith-based organizations.
- A religious organization should include evidence in its loan application that shows it has made a reasonable good faith determination, which qualifies it for a religious exemption.
- All organizations applying for the PPP and/or EIDL loans must diligently track all expenses to qualify for loan forgiveness after eight weeks.
BPM’s Nonprofit team is ready to answer additional questions, provide the most up-to-date information and give guidance on best practices for maintaining compliance during the SBA loan period.
Find more resources and information on BPM’s COVID-19 Resource Center.