I had been wringing my hands at how difficult the SBA made the first Paycheck Protection Program Loan (PPP) Forgiveness Application. It was like they had asked the IRS for advice. The EZ application cuts it down to only one page of numbers. Without a doubt, your bank will be asking you for more proof, but why would you make it so complicated to ask “How much of the loan did you spend?” That isn’t something that you need pages of worksheets to answer.
The vast majority of churches should qualify for the EZ application. I would also guess that the vast majority should choose the 24-week period instead of the 8-week to maximize forgiveness. Watch the video below for the walkthrough:
Another topic I regularly teach is Accountable Reimbursement Plans. I used to think of this as a pretty straight forward topic, but I’m an accountant. I think in accounting rules…debits, credits, etc. The best part of this presentation is that chart for figuring out if mileage is commuting or business. This would also be a good one for church treasurers to review as they also have the same questions.
There are few things more confusing than Clergy Taxes. I do a webinar annually to train new clergy on what they should know about Clergy Taxes. I had the help of a few experienced pastors on this (Jenny Hallenbeck Orr, Karl Kroger, and Jen Tyler).
Long story short, Clergy Taxes are so confusing because pastors are considered both self-employed and church-employed by the Federal government. This training isn’t to make pastors into tax experts. It’s to make them good clients of tax experts.
A big concern for me with the Paycheck Protection Program loans was how churches would actually receive forgiveness. Churches accepted these loans without knowing what strings would be attached. The good news is that forgiveness is surprisingly simple!
If you applied for the loan, watch this now because it will give you ideas on maximizing your forgiveness. You will end up with less forgiveness if you:
Reduced your FTE during the crisis without a plan to return back to normal FTE by June 30th.
Reduced an employee’s salary/wages by more than 75% during the crisis without a plan to return it back to normal by June 30th.
Normally I aim for helping church finance committees, pastors, and other leadership. With this pandemic, a lot of energy has gone towards helping the church as a small business, but what about the church as a group of individuals? If you go to long without considering the well-being of the individual, the church is going to struggle.
While there’s a ton in the CARES Act to benefit folks, I see three that are probably the biggest ones directed to individuals. Most of this is with the United Methodist pastor in mind, but they definitely do apply more broadly.
Many churches recently applied for the Paycheck Protection Program through the Small Business Administration (SBA). It’s all well and good to receive those funds, but will you receive forgiveness from the SBA? The forgiveness will depend on your churches ability to properly track expenses related to this program.
I used to be an auditor for the State of North Dakota. The government isn’t too forgiving when you don’t follow their rules. If you don’t watch the video, here’s my key advice: Read the loan agreement and take notes. I know we usually don’t read those long documents, but this pain could save you from a whole lot more future pain.
Last week the question was: How can churches apply? That was my first thought as I heard stories of churches struggling with the restriction about meeting together as a result of COVID-19. Three days later I started getting the question: Should my church apply for government relief? That’s a good question, and probably a question I should have asked first.
Honestly, I’m a little biased towards churches applying for the Paycheck Protection Program. From what I’ve read and seen, if your church is struggling as a result of this pandemic, it seems like a good thing to apply. There are valid concerns that need to be addressed about whether or not to apply. Hopefully this video helps flesh those out without being too biased.