Home Christian News What Church Leaders Need to Know About the CARES Act

What Church Leaders Need to Know About the CARES Act


Now that the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act has been signed into law, many U.S. churches, Christian schools, and other nonprofit organizations can receive assistance during the economic downturn. These employers are among those being severely impacted by lockdowns and social distancing regulations, which have been extended nationally through April 30.

The pandemic is causing financial uncertainty and strain, with unemployment claims topping 3.3 million last week. Although President Trump hoped to reopen the country by Easter (April 12), projections for the disease “peak” prompted a longer shutdown. As a result, most churches will remain empty during Christianity’s holiest season—also a time when offerings peak.

Provisions to Keep Churches Afloat

The CARES Act, now the largest relief package in U.S. history, contains a $350 billion Paycheck Protection Program (PPP) to offer government-guaranteed, low-interest loans for small businesses, as well as for churches and nonprofits registered as 501(c)(3)s. Typically, religious organizations don’t qualify for the Disaster Assistance Program run by the Small Business Administration (SBA), so during this era when up to 50 percent of nonprofits could be at risk of closing, the economic relief is welcome news for churches.

Though some regulations still need to be finalized, preliminary details reveal how this groundbreaking act can serve as a “financial bridge” during challenging times. Organizations with up to 500 employees can apply for loan assistance to cover payroll costs, mortgage or rent, utilities, and group health insurance benefits, paid sick leave, and medical and insurance premiums. Payroll costs include salary or wages (up to $100,000 annually per employee), vacation and other forms of leave, and health and retirement benefits.

The PPP covers the period between February 15 and June 30, 2020. Loans have no fees, and the amount can be calculated using this formula: total average monthly payroll costs from March 2019 to February 2020, multiplied by 2.5. The loan maximum is $10 million.

The SBA will provide funding through local banks, so most churches can obtain a loan their current financial institution. The interest rate can’t exceed four percent, and no repayments are due for one year. Loans that are used as intended—to maintain payroll—may be forgiven up to 100 percent, essentially turning the money into a grant. In turn, employers who accept a loan are expected not to then lay off staff or reduce compensation.

Questions, Exceptions, and Possible ‘strings’

The issue of pastoral housing allowances hasn’t been addressed, but experts don’t expect it to be covered. Megachurches with multiple campuses are awaiting clarification on the 500-employee limit, which might pertain to each separate location.

Churches must provide “good faith certification” that the loan will support ongoing operations, including payroll maintenance and mortgage payments. For the Paycheck Protection Loans, day-to-day operating expenses such as marketing and travel aren’t covered.

Other provisions include deferred payment deadlines for employer payroll taxes, an employee retention payroll tax credit, and reimbursements for paying unemployment benefits (applicable to nonprofits but not to most churches). Nonprofits but not churches can get Economic Injury Disaster Loans, receiving $10,000 within three days.

Though the PPP doesn’t seem to have “strings attached” that would interfere with the purpose of religious institutions, Travis Wussow of the Southern Baptist Convention’s Ethics & Religious Liberty Commission says church leaders should remain alert for any “broader entanglement issues” regarding loan forgiveness, for example.

While some critics say religious organizations shouldn’t benefit from the CARES Act, others say it would’ve been unfair to exclude them. “This is not a permanent flow of money,” says John Stemberger of the Florida Family Policy Council. “It’s one-time assistance in an unprecedented environment.” When Sen. Marco Rubio spoke to that council, he called the relief package “an extraordinary measure”—one he likely wouldn’t have supported in other circumstances.

Act Quickly, Experts Advise

Sutton Turner, COO of Houston-based church-staffing firm Vanderbloemen, says $350 billion is a lot of money but can’t help all of America’s 5.8 million small businesses. He urges churches and nonprofits to prepare their applications quickly, before funds run out.