Coronavirus Aid – 5 April 2020

The Story – the CARES ACT

 ___________________________________________________________________________

What’s the CARES ACT?

Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion emergency fiscal stimulus package to help ease the effects of the resulting economic damage from COVID-19

Isn’t that for businesses, not the church?

Part of the CARES Act does include nonprofits and religious organizations that have been affected by the economic damage from COVID-19

Tell me more.

The Act creates an emergency loan program providing loans of up to $10 million for eligible businesses and nonprofits, including churches, permitting them to cover costs of payroll, operations, and debt services. (Section 1102)

Are we eligible?

if you are a small business, 501( c )(3) nonprofit, a 501 (c )(9) veteran’s organization, or Tribal business concern described in section 31(b)(2)(C) of the Small Business Act with not more than 500 employee. So yes, the church is eligible

What do we do?

First start with research of the information that has been coming out over the last week. You can connect with some of that information on our webpage. We recommend that you review the information found from the Presbyterian Foundation, Richard Hammer Tax Guide, and others. We will add additional information as we get it.  Keep checking back.

Can’t I just google all this information?

Yes, you can. Beware that a lot of the information out there will be addressing small business and not necessarily nonprofits and churches. There also could be just “bad” information out and people trying to scam you.

What else should we know?

Lots of Presbyterian financial and legal minds are working on providing all of us with the best information. We will continue to post their musings and information on our webpage, enews, Facebook and other social media.

If we decided to apply for loans from the CARES ACT do we need Presbytery permission?

The loan/grant from the CARES Act is an unsecured loan and therefore you are not required by the Book of Order or by presbytery policies to obtain permission. The Trustees have reviewed the information and encourage your church to also review and determine if this appropriate for your situation.

You do have to have permission from your session to apply AND we strongly recommend that you inform the presbytery that you have applied so we can include it in your file and keep the appropriate Presbytery teams informed. The Trustees may ask for you to forward copies of your paperwork but at this time we haven’t determined what information we need. Stay tuned.

Where or how do we start?

We recommend you start with the Checklist we have posted on our webpage. This will take you step by step through what you need to be doing. Also review the FAQ from the SBA concerning participation of Faith-based Organizations.

If we can’t figure it out?

Liz Hutchinson, Financial Manager for the Presbytery of Newton, is ready to help you work through understanding the application process. You can reach her at lizh@highlandspresbyterynj.org .  Others have volunteered to help answer questions. Connect with Liz first.  We are all still learning how is will work or not work.

What have you learned?

Here are some highlights we have been able to glean from the information.

  • Tax-free Small Business Loans are now applicable to churches. When implemented and used as outlined in the CARES Act, these loans can be FORGIVEN. This is called the Payroll Protection Program (PPP).
  • PPP loan proceeds may be used for:
  • Payroll costs, excluding the prorated portion of any compensation above $100,000 per year for any person
  • Mortgage interest and rent payments
  • Utilities
  • Interest on debt that existed as of February 15, 2020
  • Loan amounts are based on 2.5 times of the churches average monthly payroll. Loans are forgiven when you substantiate loan proceeds used for intended expenses. Any funds not used for approved expenses will be considered a loan.  Terms are 1% interest over 2 years.
  • Move quickly. There is $350B earmarked for small business, including churches and non-profits. There has already been overwhelming response.
  • Loans are through Small Business Association (SBA) approved banks. These loans are 100% guaranteed by the government.  It’s recommended to use a bank you already have a relationship with.Interested churches should start collecting data for their application as well as reaching out to their local bank to set up an appointment immediately
    • Articles of Incorporation/organization
    • Bylaws/Operating Agreement
    • IRS forms 940, 941 and 944
    • 1099s for independent contractors
    • Certification that all employees live within the US
    • In addition, you’ll need a payroll summary report with corresponding bank statements, If not available, employee pay stubs (dating back to February 15, 2020) with bank statements and a breakdown of payroll benefits will be sufficient.

There is a lot to take in on this

Yes, there is. Hang in there. Review the information and collect your data. We will be posting more as we have the information.