On April 3, 2020, the U.S. Small Business Administration (SBA) released a FAQ addressing many of the questions for faith-based organizations applying for the Paycheck Protection Program (PPP) loans and the Economic Injury Disaster Loan Program (EIDL).
The FAQ confirmed that faith-based organizations are eligible for these loans and are exempt from the affiliation rules if the affiliation is solely based on religious beliefs or denominational affiliation. In order to claim this exemption, the organization can simply write a brief memo in the appendix of the application explaining the affiliation for religious belief purposes. There is an example provided in the FAQ that was released.
Quoting from the SBA FAQ:
“If the connection between your organization and another entity that would constitute an affiliation is based on a religious teaching or belief or is otherwise a part of the exercise of religion, your organization qualifies for an exemption from the affiliation rules. For example, if your faith-based organization affiliates with another organization because of your organization’s religious beliefs about church authority or internal constitution, or because the legal, financial, or other structural relationships between your organization and other organizations reflect an expression of such beliefs, your organization would qualify for the exemption. If, however, your faith-based organization is affiliated with other organizations solely for non-religious reasons, such as administrative convenience, then your organization would be subject to the affiliation rules.”
Faith-based organizations are also exempt from applying to receive tax-exempt status from the IRS. Finally, faith-based organizations must use the funds in the same manner as other eligible recipients.
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