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Updates and Clarifications for CARES Act

ARLINGTON HEIGHTS, Ill.—As we continue to follow developments related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, we want to make churches aware of updates to this program. Most of the regulatory details of this act are now finished, and we have revised our original article, “CARES Act Offers Forgivable Loans and Financial Assistance to Churches,” accordingly.

Late on April 2, the Small Business Administration released final regulations pertaining to the Paycheck Protection Program of the CARES Act. We noted a clarification that payments to independent contractors by organizations and churches are not considered part of an organization’s “payroll costs,” since independent contractors themselves are eligible to apply for the program. So in our original article we have updated our estimated-benefits calculator.

In addition, our article includes the following updates:

  • Loans have a low interest rate of 1%.
  • Only 25% of a loan can be used for nonpayroll expenses and still be eligible for forgiveness.
  • Banks will require that borrowers support their applications with appropriate documentation such as employer tax returns, health insurance invoices, and payroll records.
  • Since the law automatically recognizes churches as 501(c)(3) nonprofits without requiring certification from the IRS, there is no need to submit an IRS letter to a lender or to the SBA when applying for benefits.

One of the biggest concerns we’ve heard about these programs is whether a church that uses them could sacrifice any part of its religious freedom or end up being subject to additional government oversight as a result of them. We are pleased that the SBA has issued a statement clarifying these concerns and reiterating that the programs were designed to maintain employment support for American people regardless of whether they are employed in ministry or secular business. This, along with the strong Constitutional protections already enjoyed by churches, gives us confidence that no church or organization needs to be concerned with consequences to its ecclesiastical polity as a result of these assistance programs.

Read “CARES Act Offers Forgivable Loans and Financial Assistance to Churches” to learn what the CARES Act means for Regular Baptist churches.