Paycheck Protection Program: Top 7 Takeaways for Ministries

The CARES Act economic stimulus package created a forgivable loan program in the wake of the COVID-19 crisis. Religious organizations are among those who may qualify for assistance. Here’s what you need to know about the Paycheck Protection Program, which distributed $349 billion in early April and received an additional $310 billion from Congress April 23. It began accepting new applications April 27.

If your ministry has already received a PPP loan, there’s nothing else to do. The new funding doesn’t increase how much you may borrow. If your ministry wasn’t successful in obtaining a PPP loan before the first round of funding ran out on April 16, find out how to take full advantage of the stimulus. Below are 7 quick takeaways that could help your ministry remain operational. Brotherhood Mutual encourages you to talk with your ministry’s financial institution/advisor or legal counsel for details.

  1. The Paycheck Protection Program (PPP) offers relief to ministries. The aim of a PPP loan is to help small businesses and nonprofits retain workers, maintain payroll, and cover immediate expenses. Payments can be deferred for 6 months or forgiven altogether. Read more about the PPP here.  
  2. Seek funds only from approved lenders. Start by asking your ministry's local bank or credit union if it will help you apply for a PPP loan. If unsuccessful there, explore ministry relationships with other participating lenders. Finally, consider alternative options, such as PayPal, Quicken Loans, Divvy,* or other online portals. Beware of any organization seeking an upfront payment to help you file for a PPP loan. Such offers are likely fraudulent.
  3. Previous PPP applicants may need to apply again. If you applied for a PPP loan during phase 1 of the program, ask whether your lender will resume processing your request or will require a new application.
  4. Gather the information needed to request a PPP loan. This guide from the U.S. Chamber of Commerce provides information that can help you determine eligibility and prepare to file for a loan. You’ll need to document payroll costs and certify that you’ll use PPP loan funds only for approved purposes. These include:
    • Lease, rent, or utility payments.
    • Retaining/rehiring workers and maintaining payroll (salaries, full-time and part-time employee wages, independent contractor wages, benefits, state and local tax on employee compensation).
    • Expenses for social services programs.
    • Mortgage interest payments.
  5. Open a separate banking account. To take advantage of the loan forgiveness provisions of the PPP program, recipients must detail how the funds were used. A dedicated account will make this easier to track.
  6. Stick to the rules so they’ll work in your favor. 100% of the PPP loan is eligible for forgiveness if used according to the law. This is why it’s important to use the funds as directed and to keep good records. A separate account will streamline your eligibility report. Read what else is required when filing for PPP loan forgiveness.
  7. Apply quickly. While $310 billion is a large sum, the additional funds allotted during phase two of the program are not enough to support every religious organization, nonprofit, and small business that may apply for a PPP loan. The program will be available through June 30, 2020.

* We do not endorse any particular service providers. This information is being offered as an additional option ministries may consider.

Updated April 27, 2020

The information provided in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program. 

 

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