PPP – Faith Based Organizations
In addition to for-profit businesses, Faith Based Organizations may also be eligible for PPP Loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) if they are adversely impacted by the COVID-19 pandemic. Most of the rules for PPP loans apply to Faith Based Organizations just as they apply to for-profit businesses, but this article covers one area which differs for Faith Based Organizations.
How are Faith Based Organizations impacted by the Affiliation Rules for PPP?
Most for-profit businesses are not eligible for PPP loans if they have more than 500 employees. They are required to include employees in all affiliated companies when making this calculation. However, these “affiliation rules” do not apply to Faith Based Organizations. The Small business Administration has ruled that the affiliation rules set forth for PPP Loans would impose a substantial burden to Faith Based Organizations.
Accordingly, the Small business Administrations affiliation rules, including those set forth in 13 CFR part 121, do not apply to the relationship of any church, convention or association of churches, or other faith based organization or entity to any other person, group, organization, or entity that is based on a sincere religious teaching or belief or otherwise constitutes a part of the exercise of religion.
This includes any relationship to a parent or subsidiary and other applicable aspects of organizational structure or form. A Faith Based Organizations seeking loans under this program may rely on a reasonable, good faith interpretation in determining whether its relationship to any other person, group, organization, or entity is exempt from the affiliation rules under this provision, and the Small business Administration will not assess, and will not require participating lenders to assess, the reasonableness of the faith-based organization’s determination.