SBA Expands Loan Amount

New for 4.6.21: The Small Business Administration (SBA) on April 6 announced it has tripled the maximum loan amount small businesses can access for COVID-19 Economic Injury Disaster Loans (EIDL).

For details on this and other COVID-19 relief options from the SBA, click here.

Paycheck Protection Program (PPP)

New for 3.25.21: The Senate voted on Thursday to extend the deadline for the Paycheck Protection Program (PPP) by two months until May 31.

Read story here.

With the current backlog of applications, this will give applicants and lenders more time to adapt to the recent changes from SBA so that loans can be finalized.

Additional Resources

Check out the resources that are published by GCFA. Included is  updated information from January 2021 like an overview of PPP and “2021 PPP LOAN EXTENSION UNDER CONSOLIDATED APPROPRIATIONS ACT FROM GCFA & WESPATH.”

A helpful new list of do’s and don’ts for the process can be found here.

On January 19 the SBA released a simplified version of the loan forgiveness application for loans of $150k or less. It requires less documentation and makes the process easier.

Please know that there are more restrictions than in the last round. During the first round of PPP loans, businesses simply needed to certify to economic uncertainty to qualify for funding. This time around, the SBA wants to see proof of financial struggles. Specifically, you will need to have experienced at least a 25% reduction in revenue in at least one quarter between 2019 and 2020. More details below.

Key Provisions Summary

Limited Eligibility:
Eligibility is limited to churches and nonprofits that have less than 300 employees and whose gross receipts were at least 25% less in one or more quarters of 2020, as compared to the same quarter in 2019.

Necessity Requirement:
All borrowers must be able to certify that the “current economic uncertainty makes this loan request necessary to support the ongoing operations, as of the date on which the PPP loan application is submitted.

Maximum Loan Amount:
Borrowers have an option to calculate the maximum loan amount by multiplying the borrower’s average total monthly payroll in (a) the one-year period prior to the date on which the loan is made, or (b) calendar year 2019, by 2.5x. The maximum loan amount is $2 million. Similar to the first round, seasonal employers calculate their maximum loan amount differently.

Choose Your Own Covered Period:
Borrowers are able to choose the length of their covered period so long as it is at least eight weeks and is not longer than 24 weeks.

Use of PPP Funds:
Congress expanded the types of expenses for which PPP loans can be used for new and existing loans. In addition to payroll, rent, covered mortgage interest, and utilities, the PPP loan now allows proceeds to be used for:

  • Covered Operations Expenditures: payments for business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, HR and billing functions, or accounting or tracking of supplies, inventory, records, and expenses
  • Covered Property Damage Costs:costs related to property damaged due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation
  • Covered Supplier Costs:expenditures to a supplier of goods that are essential to the operations of the entity at the time at which the expenditure was made and is made pursuant to a contract or order in effect at any time before the covered period or, with respect to perishable goods, in effect at any time during the covered period
  • Covered Worker Protection Expenditures:operating or capital expenditures that allow borrowers to comply with requirements or guidance issued by the CDC, HHS, OSHA, or any state or local government during the period beginning March 1, 2020, and ending on the date which the national emergency declared by the President expires related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19. These expenses appear to include PPE, physical barriers that were put in place, expansion of indoor/outdoor space, ventilation or filtration systems, and drive-through windows.

Forgiveness for Loans under $150,000:
Forgiveness application for loans under $150,000 will be simplified to a one-page certification that includes a description of the number of employees the eligible recipient was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs and the total loan amount. Borrowers should be aware that while the forgiveness application is simplified, all of the rules still apply. All borrowers must retain all employment records relevant to the forgiveness application for a period of four years and all other records relating to PPP and the forgiveness application for a period of three years.

CARES Act Resources for PPP and EIDL

Partial List of Banks Accepting PPP Applications

Below is a list of banks who accepted loan applications for SBA’s first round of PPP (Paycheck Protection Program). The banks are listed alphabetically. Please understand the application process is a fluid situation and availability may change.

We continue to recommend that a church should contact a bank with which it already has an account. If that bank currently is not accepting applications, please continue to check. If a local branch gives what you consider to be an insufficient answer, please contact a supervisor or manager or officer.

Application for Payroll Protection Program

Easy Worksheet (Excel) to Calculate Loan Request

  • CARES Act Worksheet

    CARES Act Worksheet

    Easy Worksheet (Excel) to Calculate Loan Request. Use this easy calculator to plug in your payroll expenses to find how much you are eligible for under the CARES Act. (updated 4/2/20)

Requests for IRS Form 940

Many local churches applying for funding from the PPP Loan Program have run into a snag when their banks have asked them to produce an IRS Form 940 regarding federal unemployment taxes. The IRS has previously ruled that all United Methodist organizations, including local churches, are not liable for federal unemployment taxes and, therefore, are not required to file such a form.

In place of a form 940, GNJ suggests that a church go to apply for a group fuling letter following the instructions below. The church will receive a letter from GCFA along with attachments stating the local church is included in the denomination’s group exemption ruling. The local church should specify that it is exempt and include the letter and attachments in its application.

How to Get a Church Group Ruling Letter from GCFA

To provide evidence of its 501(c)(3) status as part of the application process for a Paycheck Protection Program loan made available by the CARES Act, churches can obtain a letter from GCFA stating the local church is included in the denomination’s group exemption ruling. If a local church does not have such an inclusion letter from GCFA, the local church can quickly obtain one via the group ruling website, which is available here: www.umgroupruling.org

If all of the information generated through the site is accurate, a local church can obtain a letter in about 5 minutes. If some information is incorrect, a local church can submit a comment to have that information corrected. (Unless a change is needed, a local church should leave the comment field blank, so as to not delay receiving a letter.)

The inclusion letter from GCFA verifies that a local church is a 501(c)(3) organization, however, some banks will ask for different supporting documentation or may not understand the significance of the documentation they are being provided by the local church. IRS Publication 4573 provides important information about the meaning of an organization being included in a group exemption ruling. If a local church runs into a problem, providing a copy of Publication 4573 may be helpful in educating the bank, or other relevant entity. That publication is available here: www.irs.gov/charities-non-profits/group-exemption-resources

Questions on obtaining a group ruling letter can be addressed to GCFA at: gcfa@gcfa.org.

Sample Language to Use for Charge Conference Motion

Motion
Whereas our nation and world are under extreme spiritual, physical, and financial strain and the Federal Government has provided funds to assist church employees and, including church employees to stay in their jobs and continue earning their salary and benefits at least through June 30, 2020;

We approve receiving funding through (both) the US -CARES Act (EIDL and) Payroll Protection Program for payroll of all clergy and lay employees of our congregation, including but not limited to pastoral, administrative, worship, childcare, maintenance and any other types of paid staff or other permitted expenditures by the program and the funds will be deposited through the church treasurer and overseen and administered by the finance committee according to the guidelines of the program.