PPP Loan Guidance Update

You likely have seen recent updates on Paycheck Protection Program (PPP) Loan Guidance.  But I want to make sure you are aware of this important update. 

The Small Business Administration (SBA) released FAQ #46 addressing how they will review whether a borrower’s good faith certification concerning the necessity of their PPP loan request.  The key point that affects all our churches is that PPP loans of less than $2,000,000 will be deemed to have made the required certification concerning the necessity of the loan request in good faith.  Their reasoning is primarily that small businesses and non-profits whose loan amount is less than this don’t readily have access to alternative sources of funding and financing and are presumed to need access to these funds.

For all our churches that received (or in the process of receiving) a PPP Loan, I would consider the following:

  • Make sure that you continue to involve your local leadership and financial advisory teams and make them aware of all matters pertaining to this loan, including this update, and involve them in any decisions made with respect to the PPP Loan.

  • Make sure that you are accurately tracking your expenditures on payroll, mortgage, and utilities for your eight week period from the receipt of loan proceeds to help you calculate your potential loan forgiveness.

  • Given that certification is no longer an issue, I would recommend not trying to make any determination at this time whether you believe your church needs to accept forgiveness of the loan at this time.

    • Processing of forgiveness doesn’t begin until after June 30, and just like this guidance, many changes can take place over the next six weeks.  I would just keep a close eye on what further guidance may come.

    • In this season of economic uncertainty and delayed effect of job losses, churches that were doing well in March and April could see larger declines in their giving this summer or even into the fall.  The intent of these programs are to maintain full employment.  My hope would be that a local church could make this final evaluation of whether to benefit from the loan forgiveness at the end of 2020.  This further guidance from the SBA that automatically confirms certification of the need (assuming none of our churches received a $2 Million loan!) makes that more possible to wait until year-end.

  • I understand that there as some who still question the wisdom of whether to receive financial aid from the government at all.  Each local church should discuss this matter and how to explain to your church your position on this if necessary. I have discussed this issue extensively with the leadership team and a number of pastors have reached out to me for counsel.  I am available to discuss with you if you believe it would help your team.

Please feel free to contact me personally if you have any questions on this or any other financial matters that may be affecting your local church. It is my great privilege and joy to serve you all!

Tommy Hill serves as the Director of Finance for Sovereign Grace Churches. He is also the Administrator for Cornerstone Church of Knoxville where he lives with his wife Elizabeth and their children.