The following is ARCHIVED material about applying for a PPP Loan, under the CARES Act.
#1 Research the CARES Act
- Read the complete bill here, if you so choose
- Paycheck Protection Program (PPP) application form here
- Small Business Association site
- Your local Chamber of Commerce: https://www.discovernepa.com/featured/coronavirus/
- CARES Act Loan Comparison Details
- Overview from U.S. Department of Treasury
#2 Consult Legal and Financial Counsel
- Consult parish legal counsel and financial advisors to determine the applicability of the CARES Act to your situation and to confirm the right steps to ensure your application and documentation are prepared correctly.
- If you do not have legal or financial advisor support on retainer, contact the Diocesan Finance Office.
#3 Understand qualifications and coverage
- Confirm that you qualify: Most small businesses and small non-profit organizations, including schools, churches, nonprofits and organizations under 500 employees will qualify. USCCB and PCC continue to provide additional guidance in regard to qualifications and the best manner of representing our needs as individual entities and as the whole Diocese.
- Confirm time period for assistance: Assistance provides loans to the above organizations to help from February 15, 2020 to June 30, 2020.
- Understand coverage, such as: Payroll costs: salaries/wages, retirement benefits, state and local taxes and vacation earned, group health insurance benefits, including paid sick/parental leave, medical and insurance premiums; Utilities; Mortgage interest payments (but not principal) or rent payments. It is unclear at this time if ministerial housing allowance for pastors will be covered.
- Understand possible coverage limitations
#4 Collect and prepare documents in advance of applying
- Download the Paycheck Protection Program (PPP) Application Form
- Start a spreadsheet. Important items to include in the spreadsheet:
- Payroll costs for the preceding 12 months prior to the date on which the loan is made (April 2019 to March 2020).
- Separate these out month-by-month.
- Account for all salary wages, meaning everything you account for in payroll costs.
- Line item documentation of the costs of benefits including retirement, healthcare, insurance premiums, bonuses, commissions, vacation, family or sick leave, severance pay.
- Include a line item for housing allowance (it is not clear at this time if you will get assistance for this, but better to include just in case. These costs are real payroll dollars for a church and they are included in a church’s normal payroll costs).
#5 Calculating how much assistance to anticipate
- From your spreadsheet, take the monthly average of the preceding 12 months (April 2019 to March 2020), and multiply it by 2.5.
#6 How to apply for CARES Act benefits
- Contact your local or regional bank: Lenders may begin processing loan applications as soon as April 3, 2020. Utilize this Paycheck Protection Program (PPP) Application Form as a guide — each bank may have variables to their application process.
- Ensure your bank is participating in the CARES Act’s Paycheck Protection Program or public-private partnership (PPP) being administered by the SBA. You can call your bank or find SBA-approved lenders in your area through SBA’s online Lender Match tool.
- Issue a Good Faith Certification: This is determined at time of application and after coverage period – post July 2020. You will need to validate that your parish needs the loan to support ongoing operations during COVID19. Also, you will need to eventually demonstrate that funds will be or have been used to retain workers and maintain payroll or make mortgage, lease, and utility payments.
- Bring the above spreadsheet and documentation in-person, or have it on hand when you call the bank.
- Confirm timing and how you’ll receive the funds. In addition, validate with your bank how you should anticipate receiving the loan funds—direct deposit, a check in the mail, or other means.
#7 Understanding the loan forgiveness process
- Research loan parameters: The full amount of the loan may be forgiven, provided you abide by certain parameters — the amount of the loan used for payroll costs, interest on covered mortgages, covered rent obligations, and covered utility payments (not interest on other debt) for an 8 week period are forgivable, assuming there have been no reductions in full time equivalent (FTE) employees or material reductions in salary. 75% of the loan needs to be used for payroll expenses in order to be forgiven. For amounts that are not forgiven, know that no loan payments under this program are due for 6 months and there are no SBA fees included in the loan, and any lender fees will be capped. There is no personal guarantee.
- Calculating loan forgiveness: Essentially, the intent of the loan/grant is to ensure that your payroll from February 15, 2020, to June 30, 2020, is equal to or larger than it was last year during that same period. Your loan forgiveness will be reduced if you decrease salaries by more than 25% for any employee that made less than $100,000 in 2019. You have until June 30, 2020 to restore your full-time employment and salary levels for any changes between February 15 to April 26, 2020. Funds that are not forgiven have a loan maturity of two years and an interest rate of 0.5%.