WV-WMD Synod :: COVID-19
CARES Act
(3 April 2020)

CARES Act information is changing daily as the affect Federal agencies attempt to interpret and implement it and those of us on the outside attempt to navigate that implementation. Consequently, we will endeavor to give you the best information and advice we have at the moment, but this may change as even Federal agencies adapt over time.

From the Synod Treasurer

Synod Treasurer Solberg has provided two communiques, the first dealing primarily with the Economic Injury Disaster Loan and the second dealing with details related to the Payroll Protection Program. We recommend that congregational treasurers read both.

Other Resources

Texts of Communique from Treasurer

Payroll Protection Program: Clarification Letter (2 April 2020)

Payroll Protection Program (PPP) funds may be available through your local bank. This may be an easier way to access the same type of funds available through the Economic Injury Disaster Loan (EIDL) program I wrote about earlier this week. The EIDL is facilitated “through Washington,” the PPP is facilitated through your local bank.

The Payroll Protection Program (PPP) has definitions that are changing daily. I am interpreting what I have seen since as of the afternoon of April 2, 2020. Institutions will begin accepting PPP loan applications on Friday April 3, 2020, and the money wont last forever.

The Payroll Protection Program, like the EIDL, can be used to cover payroll and some other essentials. The PPP, unlike the EIDL, is leveraged at your local bank branch of almost any national or semi-national bank. Think Huntington, BB&T, United Bank, etc.

Call one of these banks and tell them you would like to get added to the list of small business and non profits looking for one of these loans. Generally, these are 10-year loans with a 4% interest rate (note that while this loan may be easier to obtain than the EIDL, it has a slightly higher interest rate). Payments are deferred for 6 months, and the portion used in the first 8 weeks after the loan origination to maintain staff levels, rent, utilities, etc., is forgivable. Again, not laying off staff is key to receiving full forgiveness.

What I think might be a most significant difference for our churches between the PPP and EIDL is that the PPP, being facilitated by banks, leaves your local loan officer as the “policing agent,” and interpreter of which expenses are eligible and which are not. I am hearing from other Synod Treasurers that pastors and council presidents are having some success explaining how housing allowance plays into a pastor’s total defined compensation, and convincing the loan officer that this is coverable expense, despite not being taxable income. I haven’t heard a lot of folks say that the SBA is denying them coverage of the housing allowance portion of a pastor’s compensation, but I suspect that that is because the SBA is still slow moving. These banks are more agile.

So a key component in being successful in receiving a loan that will cover all of your payroll expenses is being able to articulate how housing allowance is a part of a pastor’s total defined compensation. If you can sell that story to your local loan officer, you can probably get a PPP loan that will cover total defined compensation for 8 weeks.

You can seek a loan for up to 2.5x your monthly payroll, but only 8 weeks of payroll, plus those other essential operating expenses, will be forgivable. Anything that remains becomes that 10 year loan at 4% interest.

You can participate in both loan programs, but you can’t “double dip,” trying to use the same payroll dollar to justify two-dollars of loan forgiveness.

I am going to include a list of documents that your, your treasurer, and/or your book keeper may want to start compiling if you want to apply for one of these loans, but know that you don’t need all this information compiled before you pick up the phone.

The first think you should do is call your local institutions, ask them if they are participating in the Paycheck Protection Program loan, and ask to get in line for consideration.

You may be asked to gather these documents.

Payroll Documentation

CARES Act: Economic Injury Disaster Loans (31 March 2020)

Church leaders of the WV-WMD Synod,

The recent Stimulus package, called the CARES ACT, has provisions that might be applicable to our congregations. The ELCA has compiled a summary here:
https://download.elca.org/ELCA%20Resource%20Repository/CARES_Act_summary_033020v2.pdf
I want to give you some brief information, to the best of my ability, on the Paycheck Protection Program.

Section 1105 of the CARES ACT creates a loan forgiveness program where loans given to small business and non-profits, including religious non-profits, can be forgiven if those funds are used to cover compensation (both wage & benefits) of employees during the covered period (March 1, 2020-June30, 2020), as well as debts paid during this period. Employees must have been hired by, and debts incurred by, February 15, 2020 to be eligible.

In other words, if you take out a $10,000 loan through the Small Business Administration (SBA), and can justify that entire amount against the qualified expenses (payroll and debts between March 1 and June 30), the entire loan can be forgiven.

It appears as though “debts” includes ongoing financial obligations such as rent, interest on mortgage payments, and some essential utilities.

This is an incentive to keep people employed during this time, so if you do lay off/fire employees during this time, your eligibility for loan forgiveness decreases. A church that lays off its Choir Director right now will still be eligible for prorated loan forgiveness, but only a church that does not lay off anyone will be eligible for 100% loan forgiveness. Any amount not forgiven will incur interest at the non-profit rate of 2.75%

I spent two hours on the phone with the SBA today to get some answers. Unfortunately, they don’t have many yet, because, in their own words, they’re “making it up as we go.” … and aren’t we all, right now?

By this weekend, they hope to have more details worked out. Here are some of the questions I asked that they are working out answers to:
The SBA worker I spoke with seems to think that questions like this will either be answered generously, because the intent of the CARES ACT was to cover as many people as possible, or will be left up to individual case workers to be determined on a case-by-case basis. He stressed that the best thing any of us can do right now is fill out the preliminary loan application on the SBA website at https://covid19relief.sba.gov/ and get in the “digital queue,” immediately. This won’t mean you’ve accepted a loan yet, it just means you’re on your way to getting a case file started. There is no harm in getting a case file started. He stressed that the longer you wait to get an application in the longer the wait for assistance will be if your approved. If you’re not approved, you will likely just need to produce more information to get approved.

Applying today does not disqualify you from other programs, but if you accept and receive a loan that will disqualify you from some of the other programs mentioned in the summary document above (ELCA Link). This loan forgiveness program will be the most lucrative program for most if not all agencies.

The application, which I have already filled out for the Synod, isn’t long, and doesn’t make a lot sense for non-profits like us. The SBA worker explained that they basically copy and pasted that application from somewhere else because they had to turn on a dime Friday night. But here’s the important part: get your church or other non-profit in the digital queue. If there is assistance available for our churches and agencies the sooner, we are in the digital queue the better. Just grab your FEIN number and what financial information you can, including banking information, and fill out the application to the best of your ability. Save the application number at the end.

I don’t have all the answers yet (and neither does the government), but it only costs a few minutes to fill out the application found at https://covid19relief.sba.gov/

Other ELCA links you might take a look at:
More information will be forth coming as I receive it.

Joseph Solberg,
Synod Treasurer
304-365-0604
Joseph.C.Solberg@gmail.com
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West Virginia-Western Maryland Synod, ℅ St. Paul Lutheran Church, 309 Baldwin Street, Morgantown, WV 26505
304-363-4030  +  Porter@WV-WMD.org