As members may be aware, on April 16, 2020 the initial $349 billion allocated to the Paycheck Protection Program (PPP) was exhausted in a little less than two weeks. In response, both houses of Congress passed the Paycheck Protection Program and Health Care Enhancement Act (“PP-HCA”) which was signed into law by President Trump shortly before the weekend on April 24, 2020.
The PPP–HCA provides an additional $310 billion for PPP, plus $60 billion more for separate Economic Injury Disaster Loans (EIDLs). If religious institutes should decide to apply for an EIDL, they are reminded to note the restrictions vis-à-vis the PPP described in RCRI’s document of April 3, 2020 highlighting applicable parts of the CARES Act. Institutes will note that an EIDL is not subject to forgiveness.
As a reminder, the PPP, administered by the Small Business Administration (SBA), provides an opportunity for a religious institute and/or its sponsored work(s) with fewer than 500 employees and as a non-profit organization to obtain loans, the proceeds of which are intended to cover payroll and certain functioning expenses for an eight-week period during the current pandemic. The objective of the PPP is to assist employers to keep their employees instead of furloughing or dismissing them, while at the same time, continuing their salaries in the middle of the current economic climate that has been created by the circumstances of the pandemic. By following the loan guidelines during the eight-week period, the organization is eligible to apply for loan forgiveness, converting the loan into a nontaxable grant.
If a religious institute decides to participate in PPP and did not participate in the first round of PPP prior to the exhaustion of funds by April 16, 2020, it is strongly suggested the institute apply as quickly as possible. It is expected the additional funding provided by PPP-HCA will also be quickly exhausted.
If a religious institute has already submitted a loan application, RCRI is of the understanding that in most cases, there is no need to resubmit the application to the same lender. The lender most likely retained the information.
However, you may wish to consider confirming this with your original lender as it seems some lenders have announced varying information. This may be accomplished by simply checking your lender’s website. By way of example, the following statements are found on the websites of two different lenders:
Lender A:
If you have already applied for the PPP program with [Lender A], please do not resubmit your application as this could lead to processing delays.
Lender B:
If you submitted an application during the first round of PPP between April 3-15, please watch your email for an important message.
[Lender B] is currently focusing on those who applied in the first round and have resubmitted an electronic application. We are currently ONLY accepting new applications from customers and NOT accepting new applications from non-customers.
Please understand that in light of the volume of applications, [Lender B] has to reserve the right to change the order in which it prioritizes applications if needed.
The good news is that we’ve built an automated system; This may help with accuracy and completeness and allow more PPP applications to be reviewed and submitted to the SBA for approval.
We are assessing the backlog daily to determine if we can start accepting new applications. If we are able to open the application process, we will announce it on our website homepage.
There is also reporting if an application was submitted prior to March 29, 2020 (the current SBA application form is dated April 2020) and no word has been forthcoming from your lender, it may be necessary to resubmit the application. Contact your lender for further details.
Members are reminded that a borrower is limited to one loan from the PPP. As those who have applied are well aware, the loan is registered under a Taxpayer Identification Number at SBA in order to prevent multiple loans to the same employer.
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