Payroll Protection Plan (PPP) Loans Authorized Under the CARES Act to Faith Based Organizations
On Friday April 4, 2020, the Small Business Association (SBA) issued guidance regarding the availability of the Payroll Protection Plan (PPP) loans authorized under the Coronavirus Aid, Relief, and. Economic Security (CARES) Act to faith-based organizations. That frequently-asked-questions (FAQ) sheet offers us some guidance and can be found here.
The FAQ clarifies that religious entities are eligible for PPP assistance, including to pay ministers. Although SBA regulations, and the application itself, adopt non-discrimination provisions of Title VI (race) and Title IX (gender/sex), the FAQ states that these provisions will not impose restrictions on a religious entity’s ability to select its membership or make employment decisions connected to its religious exercise.
However, if a religious entity runs a secular business or service, such as a coffee shop or a thrift store open to the public, those secular activities can be subject to non-discrimination regulations per the SBA:
“Receipt of a loan through any SBA program constitutes Federal financial assistance and carries with it the application of certain nondiscrimination obligations. Any legal obligations that you incur through your receipt of this loan are not permanent, and once the loan is paid or forgiven, those nondiscrimination obligations will no longer apply.”
Our private school clients should also take note of the above advisory in considering whether they wish to accept funds which subject them to federal regulation even for the period between acceptance and payoff or forgiveness of the loan.
