With the recent news of a $2 trillion coronavirus aid package, including $350 billion for small business loans, many of our churches are trying to sift through the myriad of information and legalese associated with this legislation.

As a presbytery, we acknowledge that we are in uncharted waters. This is true for our local congregations, the banks and financial institutions, and our government. Grace Presbytery is here to support you and provide reference links to the information we are receiving.

We have also compiled the following list of “Frequently Asked Questions” to help begin the discussion, as participation in this loan program is a local decision to be made by your church’s session. 

1. Is my church eligible for the Small Business Administration loans now available (which include the Payroll Protection Program) under the CARES Act?

Typically, churches and other non-profit organizations are not eligible for SBA loans. However, the U.S. Government made provisions to give non-profits assistance with payroll and other limited costs during the coronavirus pandemic in its most recent CARES Act. In these circumstances, your local church is most likely eligible, but you must determine whether your circumstances meet the current guidelines.

2. Does the presbytery need to approve a church’s application or use of these SBA loans?

These loans are collateral free and do not require signature backing. The Presbytery does have to approve other types of loans, in most cases, where your property is used as collateral. This does not apply in terms of these specific SBA loans.

3. Who can help us with this process?

Your local SBA approved lender. Your local banker is your best source of information to answer specific questions about your church, its eligibility, and the terms for these loans. Further, we recommend you seek guidance from your financial and legal advisors if you are unsure of the interpretations. Please note: Not all banks are SBA approved lenders. If your church’s bank is not able to help you, they can refer you to another lending institution.

4. Are these loan or grants? Will we have to pay back this money?

It depends.
This is not “free money” from the government. The loan includes interest rate terms and other conditions under which all or part of the loan may be forgiven, but it depends on your church’s payroll history, in addition to other considerations.  Please discuss with your local banker to assess these.

5. Our church has other streams of income (school tuition, rental income). Can these loans be used to offset the loss of income from those sources?

Possibly. As we understand it today, these loans are used primarily to help offset payroll costs within certain limits and conditions, but a portion of the loans can be used to pay rent or mortgage payments and utilities.  However, the interpretation is being clarified day by day on the details of the loan terms. Do not depend on hearsay. Please confirm with your local banking representative.

6. Are pastor salaries covered under the Payroll Protection Program?

It depends. There are interpretations and terms that apply to salary limits, housing allowance, expenses, etc. Again, the best source to guide you is your local banker or financial advisor.

7. Our church has a preschool or other school.Can we use these funds to pay teachers and staff who are not directly on the church ministry payroll?

It depends. For example, if your preschool exists under the same 501(c)3 non-profit organization as the church, the payroll that covers the teachers may be addressed in the same application. If you have contract employees, they may be covered as well. Please inquire with your local banking representative or your legal and financial experts to help interpret which employees are eligible.

8. What are our next steps if we are interested in applying for a loan?

and foremost, your session should enter into a thoughtful and prayerful conversation about whether your congregation needs or desires to apply for government assistance under these specific circumstances.

The discussion should be done in the context of faithful stewardship and knowledge of your congregation’s ministry purposes. Consider whether your congregation will be able to sustain normal giving levels during these times. Continue to communicate and encourage faithful giving. Give your congregation all means of participating in financial support of the church. Because we can’t pass the plate, your members need to know how to make gifts by mail, online giving, and bank or broker authorizations. Some creative churches are offering “porch pick up” with hand-written thank you notes for those who are unable or uncomfortable giving outside the bounds of the usual passing of the plate.

Secondly, be sure to reference your church by-laws regarding whether the session holds approval authority for loans, or whether a congregational meeting is required to approve. For purposes of approval, this should be considered debt, not a grant, and should be reviewed and decided as such.

Following this discernment process, contact your church’s local banker to seek their guidance on preparing an application.

If your church leaders have extenuating circumstances that require additional guidance, please ask your pastor or session clerk to contact their Committee on Ministry liaison.

Helpful Links:

Small Business Administration: Small Business Guidance & Loan Resources

Small Business Administration: Paycheck Protection Program

U.S. Chamber of Commerce: Emergency Loan Guide & Checklist

U.S. Treasury Department Fact Sheet

PC(USA) CARES Act Summary

PC(USA) Board of Pensions offers Dues Relief/Deferment

Presbyterian Foundation: Financial Considerations in a Pandemic