NOTE: This web page is updated constantly as new information is made available.
The latest updates, found at the bottom of this page, include:
4/4: Updated UMC Support CARES Act Q&A
4/4: New UMC Support Payroll Protection Program document
4/6: Help Available for SBA Loans and Unemployment Insurance
4/7: Interim Final Rule addressing affiliation
4/7: Faith-Based Organizations FAQ
4/9: Wespath CARES Act Update
4/10: Payment Protection Plan
4/10: Wespath Loan Applications Guidance
Congress has recently passed major legislation designed to reduce the economic impact of the COVID-19 pandemic. Some of the provisions impose new requirements on employers regarding paid sick leave, expanded family and medical leave and unemployment benefits. Other provisions of this legislation provide payroll tax credits and offer SBA loans which may be partially or fully forgivable.
Wespath, GCFA and others have provided excellent guidance summarizing this legislation. We have included links to some of those resources below and will add more as they become available. We have also prepared the following executive summary of those resources.
As with any new legislation, there are many unanswered questions and provisions that lack clarity.
Representatives of GCFA and Wespath are seeking to resolve these issues as soon as possible.
We will update this summary as guidance become available.
Note this checklist for the Louisiana Conference regarding applying for an SBA loan:
Also, as the SBA and the U.S. Treasury issue guidelines on this legislation, the information provided in these resources may change.
This summary does not provide legal advice.
We are simply curating the guidance provided by others.
We urge you to consult a CPA or an attorney for more information.
Bottom Line: Certain employers, including churches, may be temporarily required to provide employees with up to 80 hours of paid sick leave and up to 12 weeks of family and medical leave related to COVID-19.
Under normal circumstances, employers are required to post-employment law notices at their place of business. However, in this age of social distancing, the notice required under this Act should also be mailed or emailed to each employee at their address of record.
The CARES Act provides approximately $2 trillion of economic relief through Federal loan programs, rebate payments, income tax benefits, and funding programs for health care and other industries, states, and municipalities. The provisions most relevant to churches are briefly described below.
The guidance provided by the GCFA entitled “UMC SUPPORT: Coronavirus Aid, Relief, and Economic Security ACT” has an excellent discussion of the CARES Act.
The 6.2% employer portion of Social Security taxes for wages paid from the date of enactment through December 31, 2020 may be deferred and paid during the subsequent two tax years. Half of the deferred payment is due on December 31, 2021 and the remaining half is due on December 31, 2022.
It is important to note that employers are still liable for their payroll tax liability, but may defer payment until the dates established in the Act.
The Act provides a payroll tax credit for employers who have had to close or reduce operations because governmental orders limiting commerce, travel or group meetings etc. due to the coronavirus, or who have experienced a decrease in gross receipts of more than 50% in a calendar quarter in 2020 when compared to the same calendar quarter in 2019. It is designed to prevent layoffs and keep people on the job.
The credit is equal to 50% of the qualified wages (including health benefits) paid or incurred from March 13, 2020 to December 31, 2020, limited to $5,000 per eligible employee. An employer may take either the Employee Retention Tax Credit, OR the loan under the Paycheck Protection Plan described below, but not both.
Purpose of the loan: to keep employees on payroll, rehire employees you laid off, and pay for specific expenses that keep the doors open.
Bottom Line: Eligible churches and non-profits may be eligible for a short-term loan from the SBA equal to 2.5 times the average of their monthly payroll and benefits. If the loan proceeds are used to pay qualifying expenses incurred within 8 weeks of the loan origination, some or all of the loan may be forgiven. Payments of interest and principal on the portion of the loan not eligible for forgiveness are deferred for 6 months. These are unsecured loans and do not require a personal guarantee.
The SBA has issued interim Final Rules for these loans, a link to which is found below. These interim rules provide very helpful guidance and examples of how to make the required calculations.
How to Apply: Application can be submitted beginning April 3, 2020. Please note that there is a funding cap; once the funds are exhausted, no more loans will be made unless Congress authorizes additional funds. Because all banks may now issue these loans, we recommended that you work with your church's bank. Download the application here, fill it out and bring it to the bank to complete the application process.
Recommendation: Because you will have to apply for loan forgiveness, it is a good idea to open a separate checking account for purposes of receiving the loan proceeds and disbursing the funds for qualified expenses. Doing this makes your forgiveness application much simpler.
Bottom Line: Under Louisiana law, church employees are generally not eligible for unemployment benefits. However, the CARES act extends unemployment benefits to many employees who were not previously eligible. Church employees may now be eligible for temporary unemployment benefits, provided the employee is unemployed, partially unemployed or unable or unavailable to work because of COVID-19.. The CARES Act provides a partial reimbursement to certain employers for unemployment benefits paid to employees.
You can ask your bank for a list of the documentation they will require to apply for the loan. The application process for the Paycheck Protection Program loan begins April 3, 2020. Note that every bank may have unique loan documentation requirements.
You can ensure your 2019 Financial Statements are complete and your first-quarter financial statements are prepared as soon as possible.
You can ask your District Superintendent for guidance about the meetings and approvals that may be required to apply for and accept such a loan. If a Church Council vote is necessary, think about how you will accomplish that during social distancing using mailed ballots or online meetings (such as Zoom) that can accommodate large numbers of people. Most such meetings can be accomplished through Zoom or a similar electronic platform which allows participants to be heard simultaneously.
Notify your District Superintendent that you intend to apply for the loan.
If you need a copy of your 501c3 determination letter, you can find it here.
Finally, consult with a lawyer or CPA, if possible, about your eligibility for these tax credits and SBA loans and your obligations regarding the new employment benefit requirements.
If you still have questions after reviewing this Executive Summary and the guidance included on this page, you are encouraged to contact a CPA or attorney, if possible, for further guidance.
Questions submitted to Rev. Elaine Burleigh will be used to create a FAQ&A section on this page. Please check back frequently for answers to your questions.