By now you have certainly heard all about the Payroll Protection Program to help churches retain staff under the CARES Act. I’ve received several links to webinars, blogs, and articles over the last week, but I still had questions, so I texted my friend Josh who is a pastor and an Executive Consultant for Ministry Renewal.
You may remember Josh from the blog I wrote about how we raised $1.5 million for our church. He walked us through that entire fundraising process. He also wrote this blog about church fundraising for Excellent Pastor.
Below is our text conversation about the Stimulus program. I hope it helps you like it helped me. If you have more questions he is offering to help you too. You can find his contact information at the bottom of this email.
Jason: Hey Josh, I know you’ve been helping churches navigate this stimulus relief package. I was hoping you could answer some questions for me.
Jason: I guess my first question is, is this for real? Can my church get 2.5x our monthly payroll, and not have to pay it back?
Josh: Maybe. There is so much that we don’t know. We have already helped churches successfully apply for the program, but I am increasingly concerned about the predominant narrative out there among pastors that “this will be easy.”
Jason: It feels too good to be true. I feel like there will be a catch somewhere. I’m worried I might regret it in a few months when some other shoe drops.
Josh: It is true that the loan terms are outrageously generous. I just don’t know that it’s going to be that simple. Do we really believe that if a church can pay its bills perfectly on its own, the government is going to just pad the church’s savings account? That is not in keeping with the spirit nor goals of this program.
I think it’s more likely that you are going to have to prove the need, to supply documentation of your income. The math on this is going to get complicated. Documenting compliance will be arduous.
Most importantly, we don’t exactly know how a church is going to have to account for how this money is spent in order to have the loan converted to a grant. The rest of the process might be much more difficult than the application process.
Jason: So, could I just take the money, pay my staff, and then use the money I would’ve have used to pay staff for something else?
Josh: The predominant narrative essentially says this (even my church’s auditor issued us this guidance, which I continue to debate): Open a separate checking account and have the PPL funds disbursed electronically to the new account. Use that account to cover payroll and all other expenses that are convertible for an 8-week period. Retain your staff. After 8 weeks if you spend 100% of the money from the checking account on the right things, you don’t owe a dime back.
But, we are coaching churches to assume this will be a loan unless you meet the specific criteria connected to the stated purpose of the bill: (1) retain staff that you otherwise would have to lay off or (2) rehire staff that you have recently furloughed or laid off.
Jason: Ok. Thanks. One more question, couldn’t I just take the money and if it becomes a loan pay it back. Aren’t the interest rates really good?
Josh: We are seeing loans beneath 2%, which is really great, but regardless of that, they are still loans that must be repaid. My concern is that churches are going to spend the money assuming it will be forgiven and then have to repay it later, but not have the resources to do so.
Jason: That makes sense. So is your suggestion that if I need the loan to keep the doors open, I should apply for it, but if I don’t think I will need the loan, I should pass?
Josh: I don’t think that I can make that judgment for a church, but hopefully you were applying a Dave-Ramsey-Style approach to your personal budget and your church’s finances!
Josh and his team at ministry renewal are available to help coach you through the initial application, ongoing compliance, and loan conversion process. You can call them today at 404-665-7007, email CARES@ministryrenewal.com, or visit https://www.ministryrenewal.com/covid19