Key Provisions of the Paycheck Protection Program

  • It is advisable to use community banks were possible, rather than national banks, as the process to approval time has proven to be shorter.
  • Eligible churches and non-profits will be able to borrow up to 2.5 times their average monthly payrolls and benefits up to $100,000. So this appears to cap the amount to approximately $40,000 monthly of current costs.   
  • Funds can be used to cover payroll, benefits, direct invoice, employer payroll taxes, rent/mortgage payments, utilities and interest on existing debt. 
  • The SBA will have to issue guidance on how clergy housing allowance will factor into the calculations.
  • If the church or non-profit meets the employee retention requirements up to 100% of the loan can be forgiven.
  • The period during which the program applies is Feb 15, 2020, through June 30, 2020.
  • Express loans (36-hour approval) may be granted for loans up to $1,000,000.
  • Borrower and lender participation fees in the Paycheck Protection Program are waived but lender servicing fees apply up to 5%.
  • Borrowers are required to make a good faith effort to document that the loan is necessary due to economic conditions caused by COVID-19. Borrowers will need to demonstrate that the loan was used to retain employees, maintain payroll, and pay rent and utilities. They are not permitted to receive duplicate payments for the same purposes under a different SBA program. This should not be hard to do given the down swing in contributions being received in most churches.   Also, closed day cares could affect this also. 
  • The amount authorized is somewhat limited so do not delay.  Make the initial contact with your bank as suggested below.