Getting Ready Now to Participate in the CARES Act’s Paycheck Protection Program

The CARES Act, passed and signed into law on March 27, 2020, offers some amazing possibilities for helping local churches keep economically solvent through the COVID-19 crisis. If you haven’t read about it, catch up on it here.

For help in understanding the benefits and responsibilities of participating in the Paycheck Protection we strongly recommend you consult your accountant, attorney, or banker.

Churches that are interested in participating in these Paycheck Protection loans can do a few steps right now to get ready to apply:

Watch Joe Park, CEO Of Horizons Stewardship, interview attorney Jeff Watson on the impact of this bill for churches.

Start Getting Your Records Together Now

Gather into one place all payroll records from 2019 to the present. You will want a record not just of salaries but of money spent on any kind of benefits: pension, health insurance, parsonage/housing allowances, and so on. You will also need your church’s EIN (employee identification number).

You will be asked to prove you were in business at the start of the Coronavirus crisis (February 15, 2020, is the date that is being used). You could provide a church bulletin, a newsletter, a recording of the sermon, or an offering tally from that day.

You will be asked to prove you were affected by the COVID-19 pandemic. This could be a letter from your district superintendent or bishop instructing you to not hold services at your church or your letter to the congregation saying that worship would be canceled due to COVID-19.

Find a Small Business Administration (SBA) Lender

The SBA is administering this program for the government, but the application process will be handled through local banks. If your church’s bank handles SBA loans, you are in good shape. If not, it might be more expedient to investigate a bank near you that is already handling SBA loans. (Note: These are not SBA Disaster Loans, which are handled through another program. If you apply for one of those, you might lose your eligibility for a Paycheck/Payroll Protection loan.)

When You Pursue a Loan, Be Prepared to Track Expenditures Well

If you watched Joe Park’s interview with Jeff Watson linked above (if not, don’t miss it; it’s thirty minutes of great information), you heard Watson make this statement: “Getting the loan may be easy, getting forgiveness of the loan may be tedious.” His advice was, to document how every dollar was spent, consider a separate account for the loan money to have a clear trail of documentation. If your church finance people are already busy with this work, you might even want to find someone to be responsible for documenting how the loan is used, so you will be in a good place to have the loan forgiven! Again, you will want to get advice up front from an accountant, attorney or your bank.

DOWNLOAD the Application from the Small Business Administration (SBA)