We are in unprecedented times, and (for most of us) the health crisis is just weeks away. However, for all of us, the financial crisis is here.
There are roughly 350,000 churches in the United States. Most are small and have a single (often part time) staff member. Some employ hundreds. However, Warren Bird of the Evangelical Council of Financial Accountability estimates that there are 1 million people on the payroll of US churches, the majority of whom are part-time, often working other jobs.
Thus, the Congress and the President included them in the most recent stimulus bill, The CARES Act (and the Paycheck Protection Program, which is part of that act), as part of a plan to avoid sudden and vast amounts of unemployment.
While this is a fluid situation, we are committed to learning more about the CARES Act in the hours and days to come.
As such, you should expect this page to be updated.
An Overview You Need to Know
We turned to trusted voices to get the best imformation we would. One particular trusted resource that we want to note is Richard Hammar, who also revised his original article at Church Law and Tax (also a part of Christianity Today) regarding the PPE. Here’s what he noted:
- The Act establishes a new US Small Business Administration loan program called the Paycheck Protection Program for small employers (including nonprofits and churches) with 500 or fewer employees to help prevent workers from losing their jobs and small businesses from failing due to economic losses caused by the COVID-19 pandemic.
- The program provides federally guaranteed loans to cover payroll and other operating expenses.
- To be eligible, the small employer must have been harmed by the pandemic between February 15, 2020, and June 30, 2020. The Act requires eligible borrowers to make a good-faith certification that:
- the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19; and
- they will use the funds to retain workers and maintain payroll, lease, and utility payments.
- The program is retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
- Applicants can apply for this loan until June 30, 2020.
- The program provides loans of up to 250 percent of an employer’s average monthly payroll costs for the one-year period preceding the loan (excluding compensation over $100,000).
- The loan is forgiven in full if, during the eight-week period beginning when the church receives the loan, the money is spent entirely on:
- payroll costs
- group health care expenses
- interest on any mortgage obligations
- rent, including rent under a lease agreement
- interest on debt incurred before February 15, 2020
- utilities
- The amount of loan forgiveness is reduced based on an employer’s reduction in workers or wages according to a formula (but declines between February 15, 2020, and April 26, 2020, do not reduce the amount of loan forgiveness if the employer returns to pre-decline levels by June 30, 2020).
- Any portion of a loan not forgiven is carried forward as an ongoing loan with a term of two years at 1 percent interest.
- The recipient applies for forgiveness through the lender.
What is Covered?
In addition, our friends at Vanderbloemen have provided some helpful resources about how the loan funds can be used to cover payroll costs, group health insurance benefits, paid sick leave, medical and insurance premiums, mortgage or rent payments, and utilities.
Furthermore, payroll costs can include:
- Salary or wages, payments of a cash tip
- Vacation, parental, family, medical and sick leave
- Health benefits
- Retirement benefits
- State and local taxes
- Limited up to $100k annual Salary/wage for each employee
What You Need to Do Now
Therefore, in light of what we do know, here are four things you need to be doing now with regard to thinking and praying through your church’s finances in this crisis.
Click here to read more.
Source: Christianity Today
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