The federal government recently passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES” Act. This Act is the latest in a series of stimulus packages designed to boost the economy during the pandemic. The CARES Act contains help for businesses but that also applies to any organization, including churches, nonprofit organizations, and other charitable organizations.
The main source of help is in the form of a loan (that can be forgiven) that a religious organization can take to cover certain expenses. These loans are called “Paycheck Protection Program” loans and are available to employers with less than 500 employees. The loans are facilitated through local banks, but the funds are guaranteed by the federal government and the program is overseen by the Small Business Administration.
Loans are available from now until June 30, 2020 and the maximum loan amount is 2.5 times the average monthly payroll costs for the one-year period preceding the loan. The loan amount can be used to cover payroll costs, paid sick, medical, or family leave, mortgage interest (but not principal), interest on other debt obligations incurred before February 15, 2020, rent, and utilities.
Any religious organization that takes a loan is eligible to have the loan forgiven in whole or part under certain rules that are intended to incentivize employers to retain their employees during this time.
Our friends at Batts Morrison Wales & Lee, who are expert nonprofit CPAs, have helpful information for religious organizations who want more information:
- Here is a link to a detailed outline of the CARES Act as applied to a religious organization that contains helpful information: https://www.nonprofitcpa.com/wp-content/uploads/sites/20/2020/03/CARES-Act-Provisions-Relevant-for-Nonprofits.pdf.
- Here is a link to a webinar where nonprofit CPA Mike Batts overviews the CARES Act and answers questions about its application to religious organizations: https://www.nonprofitcpa.com/cares-act-overview-for-nonprofits/
Our friends at Church Law & Tax have a page set up with legal and tax guidance for churches and ministries on the CARES Act and other forms of stimulus relief passed by Congress: https://www.churchlawandtax.com/web/2020/march/coronavirus-church-legal-risk-tax-issues.html.
Churches and Ministries may have more questions about these topics and others during this pandemic. Provident Law attorneys are here to help so please reach out with your questions.