The CARES Act 2020 has been signed into law by the President. Based upon the information derived from several webinars, below is a summary of how the Act can benefit your church. We encourage you to prepare for the loan application process ASAP as the funds are available on a first come first serve basis. The SBA is finalizing the details. Please visit the websites below to obtain further information on the CARES Act.
- COVID-19 Related Legislation Overview PC(USA) – A Guide for Presbyterian Churches and Ministries (pdf)
- PC(USA) Presbyterian Foundation Summary of the CARES Act (pdf)
Small Business Administration (SBA) Coronavirus Relief Options
- Paycheck Protection Program – This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.
- Economic Injury Disaster Loan Emergency Advance – This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
- SBA Express Bridge Loans – Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
- SBA Debt Relief – The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.
Church Alliance Summary
Jean Hemphill, a member of the Church Alliance and an advisor to the Board of Pensions, was asked by the Executives of the six agencies of the General Assembly and the President of the Presbyterian Church (U.S.A.), A Corporation to provide a resource to congregations and mid councils on the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Here is a resource from the Church Alliance which summarizes the CARES Act and how financial resources authorized under the Act might be accessed.
CARES Act (Payment Protection Program) in a Nutshell:
- The CARES Act has allocated $349B to the Paycheck Protection Program.
- The loans will be available to all 501(c)(3)’s on a first come first serve basis through your local bank if they are an SBA approved lender.
- Loans are based on 2.5 times average monthly payroll costs from 03/01/2019 – 02/29/2020.
- Forgiveness of loan amount will be based on the percentage of 02/15/2020 – 06/30/2020 FTE employees over 02/15/2019 – 06/30/2019.
- There will be no payments for the loan in 2020.
- Unforgiven loan amount will be paid over 10 years beginning in 2021.
- Interest rate is < 4%
- No collateral or personal guarantees will be required.
- No fees will be charged.
- Good faith certification required to certify that funds were used for payroll, mortgage, lease and utility payments.
Additional Benefits to Churches
- Expanded 2020 standard deduction for charitable contribution
- Business deduction for charitable contributions limits increased from 10% to 25%.
- Expanded unemployment benefits.
How to prepare for the loan application and loan forgiveness:
- Create spreadsheet of payroll costs from 03/2019 – 02/2020. Include 1099 contract employees.
- Get in touch with you banker IMMEDIATELY and specifically the SBA loan administrator for application details.
- Calculate FTE’s 02/15/2019 – 06/30/2019 and 02/15/2020 – 06/30/2019. (At June 30th– To determine loan forgiveness amount.)
Websites with CARES Act information:
- https://www.churchcovid19.com – You will be directed to the Vanderbloemen website. Listen to the webinars (The Senate Bill’s Affect on Churches and Nonprofits) from 03/25/2020, 03/26/2020 and 03/27/2020. Presentation slides are also available to be downloaded.
- https://www.sba.gov – Updates about the application process should be forthcoming.
- https://covid19.arcchurches.com/ – Click “Latest Resources” and “Media” to access webinar titled “Understanding the Stimulus Bill and Churches.”