Here's info for churches about Coronavirus Aid, Relief, and Economic Security (CARES) Act:
By Larry Davis
Memphis Conference Treasurer and Director of Administrative Services
Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act Friday, March 27, to help small businesses and nonprofits get through these challenging times. There is a lot of information about the Act. Below is some helpful information from trusted and reliable resources.
Key Provisions of CARES Act
- Eligible churches and nonprofits will be able to borrow up to 2.5 times their average monthly payrolls and benefits. This is limited to the first $100,000 annually per employee.
- Funds can be used to cover payroll, benefits, direct invoice, payroll taxes, rent/mortgage payments, utilities and interest on existing debt.
- As of today, I have not heard any guidance on how clergy housing allowances will factor into calculations.
- If the church or nonprofit meets the employee retention requirements and other reporting and compliance rules, up to 100 percent of the loan may be forgiven.
- The period during which the program applies is February 15, 2020, through June 30, 2020.
- Borrowers are required to make a good faith effort to document that the loan is necessary due to economic conditions caused by COVID-19. Borrowers will need to demonstrate the loan was used to retain employees, maintain payroll and pay rent and utilities. Recipients are not permitted to receive duplicate payments for the same purposes under a different Small Business Administration (SBA) program.
- There is only $349 billion (two words that rarely go together) and there will be a great deal of demand on this program. Steps you can do now:
- Contact your bank to see if it is SBA-approved. If not, ask for help locating one.
- Once you locate an SBA-approved bank, ask them to immediately provide you loan documentation requirements once published by the SBA.
- Ensure your 2019 financial statements are complete and your first-quarter financial statements are prepared as soon as possible.
- Follow the requirements for a church to borrow money.
- A church conference is not necessary for this process because you will not be placing property up for collateral.
- Look at your internal controls to be sure you are meeting all your church’s requirements.
United Methodist General Council on Finance and Administration (GCFA):
United Methodist Discipleship Ministries: https://www.umcdiscipleship.org/articles/cares-actChurch Tax & Law:
- Small Business Administration website | https://www.sba.gov/
- Frequently Asked Questions (FAQs) for faith-based organizations about Paycheck Protection Program (PPP) | DETAILS
- PPP Fact Sheet | DETAILS
- INJOY Stewardship Solutions: https://www.injoystewardship.com/cares-act
- Horizons Stewardship: https://horizons.net/how-your-church-can-benefit-from-the-cares-act-payroll-protection-loan/
- Evangelical Council for Financial Accountability: https://www.ecfa.org/Content/ECFA-COVID-19-RESOURCES
- Paycheck Protection Program Application
- CARES Act Summary of Potential Impact for the UMC from Wespath
- CARES Act Q&A from UMC Support
- CARES Act Key Provisions from Evangelical Council for Financial Accountability
- Comparison Chart of Federal Disaster Relief and Stimulus Package Options for Nonprofits and Small Businesses
- CARES Act - Final
- PowerPoint: Paycheck Protection Program Made Simple
- Religious Institutions and the CARES Act: A Closer Look by Holland & Knight
- Loan Calculator for Paycheck Protection Program - CARES Act (Excel)
- Borrower Application Form - Paycheck Protection Program - CARES Act
- Loan Program - Paycheck Protection - Small Business Administration