COVID-19 Stimulus and Churches
By BCM/D Associate Executive Director Tom Stolle, CPA.
Many churches are facing significant financial uncertainty due to the effects of the COVID-19 pandemic. The stimulus package signed by President Trump earlier today provides potential relief for churches and pastors. Guidestone has published an excellent article addressing many questions and answers concerning the stimulus package. I encourage all pastors and church leaders to read this very important information by clicking on the link at the bottom of this article. The following are just a few of the questions and answers provided in the article:
I have heard that unemployment insurance may be available to pastors or ministry staff that lost their jobs due to the coronavirus pandemic. Is this true?
Yes, the COVID Phase III Stimulus Package provides specific provisions that will allow pastors or ministry staff who have lost their jobs to apply for unemployment benefits. The law creates a temporary program through December 31, 2020, to provide payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history and others) who are unable to work as a direct result of the coronavirus public health emergency.
Why are small business loans being made available in the Stimulus package?
The purpose of these loans is to assist small businesses in keeping workers paid and employed during the pandemic. These loans are designed to give employers an incentive and provide the ability to keep their employees instead of laying them off and shutting down their businesses. Tax-exempt entities are specifically recognized as eligible to apply for these loans that are guaranteed by the federal government.
How do small business loans work for churches and ministries?
Churches and ministry organizations that are exempt from tax under Section 501(c)(3) of the Tax Code and that have fewer than 500 employees at one location and self-employed individuals, individuals operating as a sole proprietorship or individuals operating as an independent contractor, may apply for a Paycheck Protection Loan to cover payroll and related employee expenses for the period February 15 through June 30, 2020, to help them sustain their ministries.
Will all or part of the Payroll Protection Loan be forgiven?
Yes, the program is designed to encourage employers to retain employees and loan forgiveness is a key feature of these loans. A ministry under a covered loan can have all or a portion of the principal of the loan forgiven in an amount equal to payroll costs, mortgage interest, rent, or utility costs during the eight-week period following the origination of the loan. The forgiven amount, however, may be reduced based on a formula that compares the ministry’s employment in prior pre-COVID periods with the number of employees and each employee’s wage or salary in the eight-week period following the origination of the loan.
For more information, please visit Guidestone.