Possible Financial Assistance For Your Church
March 30, 2020
Dear Church Leader,
On Friday, March 27, 2020, President Trump signed the largest economic stimulus bill to ever come through the U.S. Congress. Unlike most previous stimulus bills, the CARES 2020 Act (ACT) makes available significant benefits to Churches and other non-profit organizations. Following is a brief overview of those benefits as there is no way to explain all of the intricate details of the ACT in a letter. Your church will need to follow up with your bank, accounting service, or knowledgeable leaders in your church to determine exactly how this bill will impact your church.
The information contained in this communication is based on TBMB’s understanding of the topics covered at the time the information was prepared and may contain inaccuracies. All information herein is subject to correction and/or clarification as more complete and reliable guidance and interpretations regarding the law become available. The information contained herein is for informational and educational purposes only and does not constitute professional advice. Tennessee Baptist Mission Board is not qualified to provide such professional advice and is only presenting this as information to make churches aware of the possible opportunities approved through this legislation.
“Expanded Unemployment Benefits”
This section of the ACT provides unemployment benefits to unemployed workers from churches, religious organizations, and small nonprofits where such benefits would normally not be provided. Churches are exempt from participating in federal and Tennessee unemployment compensation systems. However, from all appearances, church employees who have been laid off during this season will be able to receive benefits.
“Paycheck Protection Program” Loans/Grants
This program will be administered by the Small Business Administration (SBA) which hopes to issue the regulations and guidelines within the next two to three weeks. In summary, the program will provide loans to employers with less than 500 employees, including churches. The maximum loan will be 2.5 times the average monthly payroll costs of the organization for the one-year period preceding the date of the loan or $10 million whichever is less. Loans may be used for 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. The amount of the loan can be forgiven if it is spent during the 8-week period beginning on the date of the loan for the specified purposes. The forgiveness is reduced by an amount calculated pursuant to a formula (with multiple variables) designed to measure if the employer reduced its workforce during a specific period in 2020. An oversimplification of this is that if the Church had 10 employees last year and only eight employees this year, then 80% of the loan will be forgiven. If the Church had 10 employees last year and still has 10 employees this year, then the entire loan is forgiven. The loan will be arranged through a bank that is an approved SBA lender. Payments are deferred 6 months to 1-year, maximum maturity is 10 years, interest rate is not to exceed 4%, and there is no pre-payment penalty.
There are many stipulations in the ACT at each point in the above discussion. These may take some effort on the part of the Church to provide the necessary information. However, it appears that the benefit provided by a loan that is forgiven should outweigh the effort to gather the necessary information.
Preparation Suggestions
While the final regulations are being prepared, churches interested in taking advantage of these benefits should do some preparation:
1) Contact your bank to see if they are an approved SBA lender or not. They will have begun to get information on the program and can assist you in preparing to apply for the loan.
2) Secure the church’s documentation as a 501(c)(3) organization. While churches are explicitly exempt under this section of the Internal Revenue Code, it is sometimes necessary to have documentation to that effect. The IRS has issued to Tennessee Baptist Mission Board a group determination letter which covers all Cooperating Tennessee Baptist Churches. A copy of that letter has been sent to every qualified church in Tennessee via email to the attention of the Pastor this week. If not received, your church may obtain one from the office of the TBMB Administrative Director by sending an email to PPoindexter@tnbaptist.org, provided the church has contributed through the Cooperative Program since November 1, 2018.
3) Pull together payroll records since March 1, 2019. The information should include for each employee: salary and other wages, employer-provided health care benefits, employer-paid retirement benefits, and employer-paid state and local payroll taxes. It is unclear whether housing allowance payments will be included or not. These should be totaled by month, with a count of full-time employees, part-time employees, and the full-time equivalency of the part-time employees.
4) Determine what process you will need to follow to have your church approve applying for the loan. This may be more difficult if the “safer-at-home” restrictions are still in place when you are ready to seek approval.
5) Avoid terminating or laying off any staff if possible until you can get more information on this program. The intention of this program is to encourage employers to keep people working and keep the economy flowing. If you have already laid off some staff, there appears to be an opportunity to rehire them and still benefit from the program.
Your TBMB staff is here to serve churches. You can find out more about this program and other useful information and resources at http://tnbaptist.org/cvresources. Our staff is working while they shelter at their homes. Please don’t hesitate to contact us if we can help.
Dear Church Leader,
On Friday, March 27, 2020, President Trump signed the largest economic stimulus bill to ever come through the U.S. Congress. Unlike most previous stimulus bills, the CARES 2020 Act (ACT) makes available significant benefits to Churches and other non-profit organizations. Following is a brief overview of those benefits as there is no way to explain all of the intricate details of the ACT in a letter. Your church will need to follow up with your bank, accounting service, or knowledgeable leaders in your church to determine exactly how this bill will impact your church.
The information contained in this communication is based on TBMB’s understanding of the topics covered at the time the information was prepared and may contain inaccuracies. All information herein is subject to correction and/or clarification as more complete and reliable guidance and interpretations regarding the law become available. The information contained herein is for informational and educational purposes only and does not constitute professional advice. Tennessee Baptist Mission Board is not qualified to provide such professional advice and is only presenting this as information to make churches aware of the possible opportunities approved through this legislation.
“Expanded Unemployment Benefits”
This section of the ACT provides unemployment benefits to unemployed workers from churches, religious organizations, and small nonprofits where such benefits would normally not be provided. Churches are exempt from participating in federal and Tennessee unemployment compensation systems. However, from all appearances, church employees who have been laid off during this season will be able to receive benefits.
“Paycheck Protection Program” Loans/Grants
This program will be administered by the Small Business Administration (SBA) which hopes to issue the regulations and guidelines within the next two to three weeks. In summary, the program will provide loans to employers with less than 500 employees, including churches. The maximum loan will be 2.5 times the average monthly payroll costs of the organization for the one-year period preceding the date of the loan or $10 million whichever is less. Loans may be used for 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. The amount of the loan can be forgiven if it is spent during the 8-week period beginning on the date of the loan for the specified purposes. The forgiveness is reduced by an amount calculated pursuant to a formula (with multiple variables) designed to measure if the employer reduced its workforce during a specific period in 2020. An oversimplification of this is that if the Church had 10 employees last year and only eight employees this year, then 80% of the loan will be forgiven. If the Church had 10 employees last year and still has 10 employees this year, then the entire loan is forgiven. The loan will be arranged through a bank that is an approved SBA lender. Payments are deferred 6 months to 1-year, maximum maturity is 10 years, interest rate is not to exceed 4%, and there is no pre-payment penalty.
There are many stipulations in the ACT at each point in the above discussion. These may take some effort on the part of the Church to provide the necessary information. However, it appears that the benefit provided by a loan that is forgiven should outweigh the effort to gather the necessary information.
Preparation Suggestions
While the final regulations are being prepared, churches interested in taking advantage of these benefits should do some preparation:
1) Contact your bank to see if they are an approved SBA lender or not. They will have begun to get information on the program and can assist you in preparing to apply for the loan.
2) Secure the church’s documentation as a 501(c)(3) organization. While churches are explicitly exempt under this section of the Internal Revenue Code, it is sometimes necessary to have documentation to that effect. The IRS has issued to Tennessee Baptist Mission Board a group determination letter which covers all Cooperating Tennessee Baptist Churches. A copy of that letter has been sent to every qualified church in Tennessee via email to the attention of the Pastor this week. If not received, your church may obtain one from the office of the TBMB Administrative Director by sending an email to PPoindexter@tnbaptist.org, provided the church has contributed through the Cooperative Program since November 1, 2018.
3) Pull together payroll records since March 1, 2019. The information should include for each employee: salary and other wages, employer-provided health care benefits, employer-paid retirement benefits, and employer-paid state and local payroll taxes. It is unclear whether housing allowance payments will be included or not. These should be totaled by month, with a count of full-time employees, part-time employees, and the full-time equivalency of the part-time employees.
4) Determine what process you will need to follow to have your church approve applying for the loan. This may be more difficult if the “safer-at-home” restrictions are still in place when you are ready to seek approval.
5) Avoid terminating or laying off any staff if possible until you can get more information on this program. The intention of this program is to encourage employers to keep people working and keep the economy flowing. If you have already laid off some staff, there appears to be an opportunity to rehire them and still benefit from the program.
Your TBMB staff is here to serve churches. You can find out more about this program and other useful information and resources at http://tnbaptist.org/cvresources. Our staff is working while they shelter at their homes. Please don’t hesitate to contact us if we can help.
