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.
The Paycheck Protection Program and is run through the Small Business Administration (SBA). All the guidance I have at this point makes me believe this applies to churches…many of whom are struggling financially because of the pandemic. There seem to be very few strings attached…you just need to be struggling financially because of the pandemic. If you are a church with any employees and have seen a large drop in offerings recently, you should consider applying.
The video will walk you through it better than I can write, but here’s the gist of what you need to do:
Have your church leadership (Trustees, Finance Committee, Admin Council) approve applying for the PPP Loan.
Fill out the application (link below).
See if your bank does SBA loans for this program. If not, find a bank or credit union that does.
Bring application and supporting materials in.
Get approval…and money.
Track carefully how loan money is spent over next 8 weeks.
Submit documentation to get all or most of loan forgiven.
A lot of churches have tight budgets so they cut Worker’s Comp coverage. Can they do this legally in North or South Dakota? Should they do this? Honestly, I’m a little murky on the North Dakota answer. I read in the Century Code how they do not consider church work to be “Hazardous Employment.” They also don’t consider farm employment hazardous…so I’m pretty sure they just didn’t want to use the word Exempt. In South Dakota, there’s no hint of any exemption, but Workers’ Comp is kind of…optional. No matter what, you’re liable, but you can either self-insure or by insurance. I would bet this is how it works in North Dakota for church employees. You are liable no matter what.
Worker’s Comp is important because it can protect both the pastor and the church when someone gets hurt on the job. Pastors actually put themselves at risk more often than you think when they are driving from place to place, working with youth, and helping out in the kitchen or with maintenance. Whenever you go to the doctor with an injury, their health insurance will want to know if the injury happened on the job to determine whether or not they will pay for the treatment.
Are there other organizations the have troubles telling the difference between employees and independent contractors? I think this is primarily a church problem. Churches often have a lot of very part-time people paid small amounts. Maybe this used to be a volunteer position that is now paid. When does that person turn into an employee? How could you tell the difference?
When you stop and think about it, it’s not that difficult. Does the person your paying act like a business? Do they have more customers than just the church? Do you give them raises like other employees or do they negotiate the rate they want to get paid? Have they taken any other steps to look like a business…like registering with the State or the IRS?
The reason this is important is for when things go wrong. For employees, the church needs to show a higher level of care. If someone get’s hurt or feels taken advantage of, the remedies and expectations (legal or not) are different.