Requirements for Churches
and Religious Non-Profits Applying for CARES Act Forgivable Loans
- Church must have fewer than 500 employees
- Churches should be registered as 501(c)(3)
with the IRS
- Churches not registered with the IRS can still
apply if they can show:
- They are organized & operated exclusively
for religious, educational, scientific or other charitable purposes;
- Their net earnings do not benefit any private
individual or shareholder;
- They do not spend a substantial amount of the
church’s time and money on lobbying for legislative issues;
- They do not intervene in political campaigns;
- Their purposes and activities may not be
illegal or violate fundamental public policy. (This is to ensure a group trying
to argue for a fake church like the “Church of Abortion Rights” cannot scam the
- The loan can cover eight weeks of necessary
- Churches must have been operational and paying
salaries and payroll taxes on February 15, 2020, to be eligible for loans.
- The maximum a church can apply for and receive
a loan is based on a calculation that will come out to 2.5 times the average
- If the loan is used to for payroll, health
care benefits and or premiums, employee salaries, mortgage or rent payments, or
interest payments, the loan will be forgiven.
- The CARES Act also waives borrower fees,
collateral and credit requirements, as well as automatically defers any
payments for six months.
- If the Church documents to the lender bank
that the loan was used for appropriate expenses outlined in the Act, then the
loan will become a federal grant with no need to pay it back.
- If the church or non-profit uses the loan for
the following unauthorized categories, then the loan must be paid back with an
interest rate of 4%:
- Compensating an employee in excess of an
annual salary of $100,000.
- Compensating an employee whose principal place
of residence is outside of the U.S.
- Emergency sick leave or emergency family leave
payments that qualify for a credit under the Families First Coronavirus
- Under this program, in order to obtain a loan,
a church should be able to show:
- Certify in good faith, that the uncertainty of
the current economic conditions makes the loan necessary to support the ongoing
operations of the borrower.
- The funds will 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, including rent,
- The church in operation on February 15, 2020,
- The church had employees for whom it paid
salaries and payroll taxes of independent contractors as reported on Form
1099-MISC as of February 2020.
Thank you to our co-laborers in the movement, the Florida Family Policy Council, for helping us put this together.