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CARES Act Forgivable Loans Info

Requirements for Churches and Religious Non-Profits Applying for CARES Act Forgivable Loans

Eligibility Requirements

  • 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 system)

  • The loan can cover eight weeks of necessary expenses.

  • 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 monthly payroll.

  • 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.

    • Federal payroll taxes

    • 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 Response Act

  • 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, and utilities.

    • The church in operation on February 15, 2020, and

    • 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.


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