Wednesday, April 8, 2020

Posted in: COVID-19 Updates

Participation of Faith-Based Organizations

Faith-Based FAQ

1. 1. Are faith-based organizations, including houses of worship, eligible to receive SBA loans under the PPP and EIDL programs? 
      1. Yes, and we additionally clarify that faith-based organizations are eligible to receive SBA loans regardless of whether they provide secular social services. That is, no otherwise eligible organization will be disqualified from receiving a loan because of the religious nature, religious identity, or religious speech of the organization. The requirements in certain SBA regulations— 13 C.F.R. §§ 120.110(k) and 123.301(g)—impermissibly exclude some religious entities. Because those regulations bar the participation of a class of potential recipients based solely on their religious status, SBA will decline to enforce these subsections and will propose amendments to conform those regulations to the Constitution. Although 13 C.F.R. § 120.110(a) states that nonprofit entities are ineligible for SBA business loans (which includes the PPP program), the CARES Act explicitly makes nonprofit entities eligible for the PPP program and it does so without regard to whether nonprofit entities provide secular social services.
   2.  Are there any limitations on how faith-based organizations can use the PPP loan money they receive?
      1. Only the same limitations that apply to all other recipients of these loans (such as that loan forgiveness will cover non-payroll costs only to a maximum of 25% of the total loan to a recipient). The PPP loan program is neutral, generally applicable loan programs that provide support for nonprofit organizations without regard to whether they are religious or secular. The CARES Act has provided those program funds as part of the efforts to respond to the economic dislocation threatened by the COVID-19 public health emergency. Under these circumstances, the Establishment Clause does not place any additional restrictions on how faith-based organizations may use the loan proceeds received through the PPP loan program.

*INFORMATION IS SUBJECT TO CHANGE AS SBA DEEMS NECESSARY*

To access the SBA application, CLICK HERE.

To access information regarding the SBA Paycheck Protection Program (PPP), CLICK HERE.

To read additional information specific to faith-based organizations and the PPP, CLICK HERE.