Churches that missed out on the first round of the CARES Act’s Paycheck Protection Program (PPP) will want to restart their efforts immediately after the federal government approved more funding for the loan forgiveness program.
The US Small Business Administration (SBA), which oversees the program, will begin accepting applications again at 10:30 a.m. (Eastern Daylight Time) on April 27, 2020.
The PPP offers employers with fewer than 500 workers, including churches and nonprofits, the chance to obtain loans intended to cover payroll and other certain operational expenses over an eight-week period during the COVID-19 (coronavirus) pandemic. PPP’s goal is to help employers retain their workers, rather than lay them off, and maintain their compensation levels in the midst of the economic fallout caused in large part by shelter-in-place and public-gathering directives designed to keep people home and slow the spread of the virus.
If those small employers spend proceeds from their PPP loan in a certain way during the eight weeks, they are then eligible to apply for forgiveness. Most, if not all, of the loan can convert into a nontaxable grant.
The initial $349 billion allocated to the PPP ran out on April 16, 2020. The new law—dubbed the Paycheck Protection Program and Health Care Enhancement Act—was passed by both houses of Congress and signed on April 24, 2020, by President Trump. It provides an additional $310 billion for PPP, plus $60 billion more for separate Economic Injury Disaster Loans (EIDLs). Churches also can apply for EIDLs; however, if they receive both a PPP loan and an EIDL, they need to make certain the EIDL is not spent on anything the PPP is intended to cover.
There is already speculation the PPP’s latest funding will get doled out quickly. Churches that wish to participate should submit an application to a lender approved by the SBA as soon as possible.