We have heard a lot about the CARES Act and the Payroll Protection Program (PPP) that includes non-profits and churches. We know that as of April 3, 2020, you can go to the bank that services your Local Church account (Must be SBA Approved) to start the Application Process. However, If you do not need the payroll assistance, please do not apply. The Paycheck Protection Program is designed to keep workers employed with payroll assistance amid the pandemic and economic downturn.

This starts out as a loan and can be forgivable after the first twelve months only if the funds are used according to the SBA guidelines. Otherwise, it will be a loan with interest to be paid back in a period of two years at an interest rate of 0.50%. Therefore it is very important that you speak with your bank and understand the guidelines for this program.

What is required by the Church of God Minutes?


1. Talk to your banker about the application to see if you qualify
2. Notify the ENC Church of God State Office that you are applying for the Loan
3. Send a copy of the bank application/information to the State Office
4. The State Council ERT (Emergency Response Team) will review the application and send a letter of approval.

What can the church use the fund for?

The funds can be used for the following expenses….
1. Payroll Cost (This will be the majority of the amount borrowed)
2. Payroll Benefits (Existing Health Care/Insurance premiums and/or sick leave)
3. Utilities
4. Mortgage or Rent Payments (ONLY the interest portion of mortgage is forgiven)
5. Interest on any other debt obligation that were included before February 15

How can the loan be forgiven?

-Loan forgiveness will be available for up to 8 weeks of payroll cost, mortgage interest payments, mortgage obligation, rent payments, it also may include payments on the other debt and utility payments (SUBJECT TO CERTAIN RESTRICTIONS)

-Forgiveness is subject to loan funding being used for the approved purpose and maintaining the average size of your full-time work force from February 15, 2020 through June 30, 2020 compared to the same period the prior year.

-Funds must be spent on what it was intended for

-At the end of June 30, 2020, a request can be submitted for a loan to be forgiven. More specific information on this process will be provided

-The participant will be required to provide a worksheet showing how the current full-time equivalent compares to the exact same time period in 2019

-The government requires the organization to employ FTE no differently in 2020 than in 2019.

What happens if the local church borrows money and it is not used for the original intent?

-A loan will be immediately established

-No fees will be paid on the loan

-No payments will be required until 2021

-Interest rate will be 0.50%

NOTE: Applicants for this loan should be aware of all the restriction and guidelines and strictly comply and adhere or the loan will not be forgiven. To except this loan, the church has to agree to abide by certain laws that normally churches are not subject to.

Finally, the rules and regulations seem to be changing daily and the information provided here could change once the church/borrower has a conversation with their local SBA designated bank.

SBA to Start Taking Loan
Applications April 3

(April 1, 2020)

Under intense pressure from the White House, Congress, and small business organizations to move quickly, the Small Business Administration has released an application and preliminary information on the new loan program provided for under the CARES Act. The process seems to be overly simplified, compared to previous SBA loan programs, thus following the recommendation of President Trump.

While the information contained in the initial SBA documents do not specifically align with the wording contained in the legislation, the new documentation does provide insight as to the process that the Small Business Administration will use in determining eligibility for these new loans. For example, while the legislation provides that the “loan shall have a maximum maturity of 10 years,” the SBA’s initial documents provide for only a two-year loan period. On the other hand, the legislation provides for an interest rate “not to exceed 4 percent,” but the SBA documents peg the interest rate at 0.50%.

Further, the application that is available here (and also available on the SBA website at https://home.treasury.gov/cares under “Assistance for Small Businesses”) for these “payment protection“ SBA loans has to be filed with the borrower’s local lender/bank, not with the SBA.

It is also important to remember that the SBA has another loan program, called the Economic Injury Disaster Loan (EIDL) program. Although historically churches have not been eligible for the EIDL loans (loans made directly by the SBA), the SBA seems to be applying the CARES Act guidelines to those loans as well and allowing churches to apply. It is important to remember that there is no forgiveness program under the EIDL loan program. The forgiveness provision is only under the “paycheck protection“ loans for which the application is attached here.

Applicants for an SBA loan should be aware that the loan application requires them to declare that they will “comply, whenever applicable, with the civil rights and other limitations in this form.” The application goes on to point out that applicants must agree not to discriminate in any business practice, including employment practices and services to the public…..” This provision, as well as the other restrictions contained in the application, should be discussed at length with your lender before proceeding.

As has been noted previously, the rules and regulations seem to be changing daily and the information provided here could change once the church/borrower has conversations with their local SBA designated bank.

Finally, please note that the SBA has now stated that banks will start taking applications for these loans by April 3, a week ahead of their previous projection.

SBA Loans Now Available to Churches

Churches Eligible for Relief Under Stimulus Legislation

(March 30, 2020)

CLEVELAND, TN: As you may be aware, on Friday, March 27, 2020, President Trump signed into law the massive $2.2 trillion stimulus bill, known as the “Coronavirus Aid, Relief, and Economic Security Act,” or the “CARES Act.” 

Of interest to our churches, the bill contains a $367 billion Small Business Administration (SBA) loan program. The loans convert to grants (and can be forgiven) if used for covering employee salaries, rent, paid leave, utility payments, health insurance premiums, or other necessities or worker protections.

Although normally nonprofits/churches cannot apply for SBA loans, an exception has been made under this bill, and based upon the legislative language, these funds will be available to churches also. Application will be made through the church’s local bank and the loan will be guaranteed by the SBA. The interest rate on the loan, if not forgiven, cannot exceed 4.00% and the loan must be repaid in ten (10) years. It is expected that no security collateral will be required.

While churches can apply for these loans and the forgiveness program, they should exercise caution and understand the restrictions that come with the loans. Each church that is interested in these loans should have a detailed conversation with their state/regional Administrative Bishop and their local banker before proceeding.

Although the legislation became law on Friday, March 27, it is expected that it will take the SBA at least 10 days or more to write the regulations to implement this provision. So, these loans will not be available for probably at least a couple of weeks if all goes perfectly well.

A copy of the 880-page CARES Act is attached, along with frequently asked questions, for your information.

Frequently Asked Questions
(March 28, 2020)

The $2.2 trillion stimulus package, called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was signed into law by President Trump on Friday, March 27. As previously noted, the legislation contains a revamped loan program through the Small Business Administration (SBA). While historically SBA loans are not available to churches, because of the current coronavirus pandemic, the legislation made an exception and allows nonprofits/churches to receive these governmental guaranteed loans.

If the loans are used for “paycheck protection” programs, there is also a forgiveness provision, basically turning the entire loan, or at least the portion used for paycheck protection, into a grant from the government.

The following is a list of questions and answers, specifically geared to churches, that have been raised concerning this new program:

Who is eligible for the loans?
Businesses and nonprofits with fewer than 500 employees who were in business prior to Feb. 15, 2020.

May churches apply for these SBA guaranteed loans?
Yes. The legislation specifically allows nonprofit organizations to apply.

What type of collateral is needed to get these SBA loans?
None. They are 100% federally backed and do not require collateral or personal guarantees.

How much can I borrow under this program?
Generally, 2.5 times the average total monthly payroll costs incurred in the one year period before the loan is made, capped at $10 million.

In determining payroll costs, what is included?

  • Salaries and other wages
  • Employer paid health care benefits
  • Employer paid retirement benefits
  • Employer paid state and local payroll taxes

In determining payroll costs, what cannot be included?

  • Compensation of an employee in excess of an annual salary of $100,000
  • Federal payroll taxes
  • Compensation of an employee whose principal place of residence is outside the United States
  • Emergency sick leave or emergency family leave covered under another stimulus bill.

How does a church apply?
You must apply through your bank, credit union, or other lender that participates in the SBA 7(a) program.

Once I apply, how long will it take to get the money?
Once the SBA guidelines are available (probably within 7-10 days of passage of the bill), funds can be disbursed the same day of the application.

What are the requirements to get a loan?

  • A good faith certification that the current economic conditions makes the loan necessary to support the ongoing operations of the borrower
  • Information that the borrower was in operation on February 15, 2020
  • The borrower had employees and paid salary and benefits as of February 2020, and
  • A certification that the funds will be used for
    • Payroll costs
    • Paid sick, medical, or family leave
    • Mortgage interest (but not principal reduction payments)
    • Interest on other debt obligations incurred before February 15, 2020
    • Rent, or
    • Utilities

What is the interest rate on the loans?
The maximum interest rate is set by law at 4%.

How long does the church have to pay back the loan?
The loans are for 10 years.

Does the church have to start making payments immediately?
The legislation allows borrowers to defer payments for six months, and possibly up to a year. Once the deferment is over, the 10-year amortization period starts.

If the church is going to apply for one of the SBA guaranteed loans, when must we apply?
The legislation states that the loans are available from February 15, 2020 to June 30, 2020. Therefore, it seems as though you would have to apply before June 30.

Will the church have to repay this loan or is it a grant?
The legislation creates a low interest loan program for which churches are eligible to apply. However, if the church maintains its employees between March 1 and June 30, 2020, there is a provision that allows for certain forgiveness of some, or all, of the loan, essentially turning the loan into a grant.

A formula is used to determine whether the borrower reduced its workforce during a specific period in 2020. If not, and if the funds were used to pay eligible expenses, those amounts can be forgiven.

What amounts can be forgiven under the forgiveness program?

  • Allowable payroll expenses
  • Covered Rent Payments
  • Covered Utility Payments
  • Mortgage interest (does NOT include principal reduction payments)
  • Interest on certain other debt obligations

How does a church apply to have some or all of their loan forgiven?
You must submit an application and documentation for forgiveness to your lender for any amount to be forgiven.

How much money is available through the SBA for this loan program and forgiveness program?
The legislation provided at least $349 billion.


Are church employees covered under the expanded unemployment benefits of the CARES Act?
The legislation expands benefits for displaced employees who are already eligible for unemployment benefits and provides unemployment benefits for specifically designated employees. Church related workers, who are normally not eligible for unemployment benefits, are not included in the specific designations, and from all indications, church employees and ministers are not eligible for benefits under the expanded unemployment benefits program of the legislation.

Were charitable contributions addressed in the legislation?
A specific one time provision was included in the legislation, allowing for an “above the line“ deduction for charitable contributions, limited to only $300 and only applicable for the 2020 tax year, for those who do not itemize.

Were employer payroll taxes addressed in the CARES Act?
Under the legislation, employers, including churches, may defer payment of 50% of the employer payroll taxes attributed to wages paid during 2020 until December 31, 2021, with the remaining 50% deferred to December 31, 2022. For the purposes of this provision applicable to churches, payroll taxes is only the employer’s portion of FICA. Of course, FICA does not apply to ministers.

(NOTE: The information provided is based upon a review of the legislation, discussions with officials engaged in the direct negotiation of this legislation, and published reports on the legislation. Please be aware that regulations to carry out the legislation could change the responses provided above.)