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The SBA is not accepting Paycheck Protection Program (PPP) applications from businesses with 20 or more employees between February 24 and March 10, 2021. But you can still submit your application to your lender during this time. All eligible small businesses can apply after that date, until the program close on March 31, 2021.
Faith-based organizations have more access to SBA funding, thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act. You can now fund all expenses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Program — not just secular activities. And you don’t necessarily need to meet standard eligibility criteria to qualify.
Faith-based organizations can now qualify for loans through the PPP and EIDL loans, thanks to the CARES Act.
Subsections 13 C.F.R. §§ 120.110(k) and 123.301(g) of SBA regulations prohibit the government from funding or backing funding for faith-based groups for 7(a) and disaster loans. But the SBA decided to ignore these two regulations, since the CARES Act allows for funding to nonprofits and doesn’t make a distinction between faith-based and secular nonprofits.
“Faith-based organizations have always provided critical social services for people in need,” SBA Administrator Jovita Carranza said in a statement on April 4, 2020. “And [the] SBA will make clear that these organizations may access this emergency capital.”
Paycheck Protection Program loans are 100% backed by the government and designed to help small businesses and nonprofits cover payroll costs. The program offers up to 100% forgiveness for 8 or 24 weeks of payroll costs and some other operating expenses if your nonprofit doesn’t reduce wages or lay off employees. This was extended from the original eight weeks of payroll costs and other operating expenses with the passing of the Paycheck Protection Program Flexibility Act.
You can borrow 2.5 times your monthly payroll expenses, up to $10 million. All loans come with a 1% interest rate and a two- or five-year term for any amount that’s not forgiven. It also comes with deferred payments until 10 months following the end of your covered period or forgiveness is issued to your lender, though interest continues to accrue during this period.
You can apply for a PPP loan through SBA 7(a) lenders, federally insured banks and credit unions, and farm credit systems. Other lenders can also offer PPP loans, after getting SBA approval. The application is only two pages long and takes just a few minutes to complete. You can often fill it out and sign it entirely online, depending on your lender.
Finding a lender can be the most difficult part, since some ran out of funds quickly during the first round and restricted applications to existing customers. Even with these restrictions, lenders were overwhelmed with applications, so it’ll likely take a few weeks to get a response. And once you do, you’ll likely need to provide documentation proving your payroll costs and benefit expenses, if you didn’t already.
Funded by the SBA, EIDLs are long-term loans that your nonprofit can use to cover operating expenses — including payroll. While it originally said you can borrow up to $2 million, The New York Times reports that the SBA is now capping loans at just $150,000 due to an increase in demand.
Rates are still fixed at 3.75% for small businesses and 2.75% for nonprofits, with terms as long as 30 years depending on your ability to repay. You currently have the option to defer payments for up to one year. The SBA previously offered an EIDL Advance — a grant of $1,000 per employee. But currently, grants aren't available.
You can apply by filling out an online application on the SBA disaster loan website. You’ll need to provide basic financial details about your organization, including revenue lost due to the COVID-19 outbreak. At the end of the application, you can check a box to be considered for the advance.
It can take a few weeks to hear back from the SBA, which might ask for documents supporting the information you gave in the application.
Below is a list of online lenders offering SBA Paycheck Protection Program loans. We recommend applying as soon as possible, since funds are available on a first-come, first-served basis. Get help filling out the application with our guide.
Like other types of businesses and nonprofits, not all faith-based organizations are eligible for these SBA loans.
No, the SBA makes an exception to affiliation rules in this case. If your organization is affiliated with a larger group because of the way your religion is structured, the SBA does not consider that affiliation. For example, a Catholic church can still qualify despite being affiliated with a diocese.
Yes, your organization is legally bound to meet certain requirements while it’s paying off the SBA loan. Your organization can’t discriminate who receives goods, services or accommodations based on race, color, religion, sex, handicap, age or national origin.
This doesn’t apply to organizational membership or employment for faith-related positions. It also doesn’t apply to services related to members of the religious community — just those meant to serve the general public. And these restrictions don’t apply after you’ve repaid the loan.
If you have any concerns about when this does or does not apply, contact a legal expert.
Still can’t qualify for these SBA programs? Looking for funding to tide you over in the meantime? Consider these alternatives:
Faith-based organizations are eligible for the two main SBA loan programs offering assistance during the coronavirus outbreak. In some cases, you don’t have to be a registered nonprofit to qualify or meet affiliation rules. However, taking out an SBA loan comes with legal requirements, which could change the way you run your organization.
Learn more about your options by reading our guide to business loans during the COVID-19 outbreak.
Answers to commonly asked questions about SBA loans for faith-based organizations.
Yes, your organization doesn’t need to fall under an industry on the SBA size standards table. In that case, it can qualify as long as it has no more than 500 employees.
No, faith-based organizations face the same spending restrictions as all other types of businesses, which vary by program. For example, PPP loans are meant to mainly cover payroll expenses, while you can cover more operating costs through the EIDL program.
You don’t have to apply separately, but you’re required to attach an addendum to your application stating that your organization is exempt from affiliate rules based on 13 C.F.R. 121.103(b)(10).
Here’s where to get financial help for yourself and your business if you’ve been affected by the storm in February 2021.
The White House announced new changes to PPP loans, helping the smallest businesses and opening access to people with student loan defaults or nonfraudulent felony convictions.
Now 90% of all small businesses in New York State can qualify for NYFLF.
The PPP wasn’t made with sole proprietors and independent contractors in mind. Here are other options that can help.
Some PPP borrowers can get another round of funding through community lenders — though not all can qualify.
You only have until the end of March to get your next application in.
First Draw loans are now available through nonprofit lenders, with Second Draw loans following shortly behind.
While you can get started on your loan application today — you’ll still need to wait for funding.
Grants of up to $10 million for businesses that rely on ticket sales.
You might be able to apply for more funding on your PPP loan, get a second PPP loan or take advantage of a new grant program.