Churches, Christian schools and nonprofits are among those who could find some relief from the $2.2 trillion rescue package, also known as the CARES Act, that was signed into law by President Donald Trump on Friday after sweeping through the Senate and House chambers.
Entities that are 501c(3)s are eligible to participate as part of $350 billion in federally guaranteed loans via the Paycheck Protection Program that provides eight weeks of cash-flow assistance to small business who maintain payroll during the emergency.
“Churches, Christian schools and other nonprofit organizations will receive much-needed access to federally guaranteed loans to continue their mission while also protecting their workers,” said Senate Majority Leader Mitch McConnell. “At times of crisis, Kentuckians consistently step up to help their neighbors in need. I’m so proud of organizations and individuals – many who are people of faith – providing inspirational care to Kentucky seniors and those who need to be extra cautious.”
In the Paycheck Protection Program, if the employer maintains its payroll, then the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers remain employed and affected small businesses and our economy recover quickly from this crisis.
This proposal would be retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls.
“The coronavirus presents a serious challenge for every Kentuckian,” McConnell said. “That’s why I mobilized your government as Senior Majority Leader to pass a bold rescue package that will get immediate cash into the hands of Kentucky families and small businesses.”
Here’s a closer look at the Paycheck Protection Program:
--The bill would provide $350 billion to support loans through the new program for:
--The size of the loans would equal 250 percent of an employer’s average monthly payroll. The maximum loan amount would be $10 million.
--Covered payroll costs include salary, wages, and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave.
--The cost of participation in the program would be reduced for both borrowers and lenders by providing fee waivers, an automatic deferment of payments for one year, and no prepayment penalties.
--Loans would be available immediately through more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions, and SBA would be required to streamline the process to bring additional lenders into the program.
--The Treasury Secretary would be authorized to expedite the addition of new lenders and make further enhancements to quickly expedite delivery of capital to small employers.
--The maximum loan amount for SBA Express loans would be increased from $350,000 to $1 million. Express loans provide borrowers with revolving lines of credit for working capital purposes.
No owner, trustee or board member of the organization have to sign a personal guarantee for the loan.
Funds that are not forgiven – if you have fewer employees in 2020 than in 2019 - have a loan maturity of 10 years.
Normal operating expenses like marketing, administration, travel, etc. are not included in the CARES bill. The Federal Reserve and Small Business Administration have been fully funded during the past few weeks with additional dollars to assist smaller organizations.
If a church or non-profit has laid-off staff, these former workers have expanded unemployment through the Emergency Unemployment Relief for Nonprofit Organizations. CARES allow for payment to states to reimburse nonprofits for half of the costs they incur through December 31, 2020, to pay unemployment benefits.