SBA Interim Final Rule Regarding PPP and First Amendment Concerns

Members may recall receiving two documents yesterday from RCRI regarding aspects of the Covid-19 FFCRA Act ("Phase 2") legislation and the CARES Act ("Phase 3") legislation that may be of benefit to members of religious institutes. 

Part of the CARES Act includes the Paycheck Protection Program ("PPP") found at sections 1102 and 1106 of the legislation. Part of RCRI's discussion of the PPP included an open question as to whether participation in the PPP would involve any First Amendment free-exercise issues or conflicts. 

That question seems to have been addressed by the US Small Business Administration ("SBA") in an Interim Final Rule which was released late on April 2, 2020 in addressing 13 CFR 120. The pertinent part of this Interim Final Rule is found at the bottom of page 27 and top of page 28 of the Rule. A copy of the Interim Final Rule is attached. This statement in the SBA's Final Rule seems to provide confidence the SBA's nondiscrimination regulations shall not apply to a religious corporation, which obviously includes a religious institute.

The pertinent part of the Interim Final Rules states:

All loans guaranteed by the SBA pursuant to the CARES Act will be made consistentwith constitutional, statutory, and regulatory protections for religious liberty, including the First Amendment to the Constitution, the Religious Freedom Restoration Act, 42 U.S.C. 2000bb-1 and bb-3, and SBA regulation at 13 C.F.R. 113.3-1h, which provides:

“Nothing in [SBA nondiscrimination regulations] shall apply to a religious corporation, association, educational institution or society with respect to the membership or the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its religious activities.” 

SBA may provide further guidance, if needed, through SBA notices and a program guide which will be posted on SBA's website at www.sba.gov. Questions on the Paycheck Protection Program 7(a) Loans may be directed to the Lender Relations Specialist in the local SBA Field Office. The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices.

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Please contact RCRI if you have any continuing questions or concerns.