Pandemic could deal a calamitous financial blow to many congregations
'Don’t waste time. Do it now.” That’s Jason Thompson’s advice…
Business lawyer Michael E. Flowers serves as a deacon of the Church of Christ at Genessee Avenue in Columbus, Ohio.
Bobby Ross Jr.: What is the Paycheck Protection Program, and what benefit do you see for Churches of Christ?
Michael E. Flowers: The Paycheck Protection Program, or PPP, is a $349 billion loan program established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations and tribal businesses keep paying their employees during the current pandemic.
In general, organizations, including churches, that employ 500 employees or less are eligible for a PPP loan. The amount any small organization is eligible to borrow is 250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover eight weeks of payroll expenses and existing interest payments on mortgages, rent payments, leases and utility service costs.
The most attractive feature about a PPP loan: If you keep your employees — at their current base pay — and otherwise use the loan proceeds to pay permitted expenses, the loan will be forgiven at the end of the eight-week period.
Many Churches of Christ have ministers, administrators, ministry leaders and others who receive salary compensation from the congregation. A PPP loan could be used by the congregation to pay these salary costs over an eight-week period, thus taking pressure off of church budgets that might have been negatively impacted by reduced giving by members as a result of the coronavirus pandemic.
Ross: How would you respond to concerns by some church leaders about mixing God’s business with Uncle Sam’s money?
Flowers: Some congregations might be reluctant to avail themselves of this federal government loan program for fear of losing their autonomy.
The U.S. Small Business Administration, which is the government agency that administers the PPP loans, has responded to this concern in written guidance. The guidance states that a PPP loan will not:
1. Limit the authority of religious organizations to define the standards, responsibilities and duties of membership.
2. Limit the freedom of religious organizations to select individuals to perform work connected to that organization’s religious exercise.
3. Nor constitute waiver of any rights under federal law, including rights protecting religious autonomy and exercise under the Religious Freedom Restoration Act of 1993.
“Simply put, a faith-based organization that receives a PPP loan will retain its independence, autonomy, right of expression, religious character and authority over its governance.”
Simply put, a faith-based organization that receives a PPP loan will retain its independence, autonomy, right of expression, religious character and authority over its governance. No faith-based organization will be excluded from receiving funding because leadership with, membership in or employment by that organization is limited to persons who share its religious faith and practice.
Ross: Now that the initial $350 billion authorized for the program has been claimed, are congregations that didn’t take advantage of the money earlier out of luck?
Flowers: Although the initial funding for the PPP loans has been claimed, because of the large unmet need, it is highly likely that Congress will appropriate additional funds for PPP loans. Reports have been circulating that as much as an additional $250 billion may be made available for the next round of PPP loans. (Editor’s note: The Washington Post reports that legislation passed by the Senate on Tuesday and facing House approval Thursday would allocate an additional $310 billion for the program.)
Ross: As a business lawyer and church deacon, what other advice would you offer to fellow leaders of Churches of Christ at this time?
Flowers: PPP loans are made on a first-come, first-served basis. Therefore, church leaders should contact their banks now to submit their loan applications so that when additional funds become available, the congregation will be in line to have its loan application processed and funded.
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Will your home congregation take advantage of the Paycheck Protection Program funds? Why or why not? Please comment below, and be sure to include your home congregation, city and state in case we decide to quote you.
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