Rules for churches applying for SBA COVID relief

This is a portion of the U.S. Small Business Administration guidance on eligibility of faith-based organizations when it comes to the economic injury disaster loan and paycheck protection program loans that were reauthorized by Congress in December 2020.

1. Are there any limitations on how faith-based organizations can use the PPP and EIDL loan money they receive?

The same limitations that apply to all other recipients of these loans (such as that loan forgiveness will cover non-payroll costs only to a maximum of 25% of the total loan to a recipient) apply.

2. Will the faith-based applicant be sacrificing its autonomy or its First Amendment or statutory rights if it requests and receives a loan?

No. Receipt of a loan through any SBA program does not (1) limit the authority of religious organizations to define the standards, responsibilities, and duties of membership; (2) limit the freedom of religious organizations to select individuals to perform work connected to that organization’s religions exercise nor constitute waiver of any rights under federal law, including rights protecting religious autonomy and exercise under the Religious Freedom Restoration Act of 1993 or the First Amendment.

3. What legal requirements will be?

Receipt of a loan through any SBA program constitutes Federal financial assistance and carries with it the application of certain nondiscrimination obligations. Any legal obligations that you incur through your receipt of this loan are not permanent, and once the loan is paid or forgiven, those nondiscrimination obligations will no longer apply.

For more information, visit the SBA website.