The coronavirus stimulus package signed into law last week not only serves to bolster individuals, families and for-profit companies impacted by the ongoing pandemic but also offers relief to churches and ministry staff as well.
The Southern Baptist financial services company GuideStone published an explainer document produced by its legal team to lay out how the Coronavirus Aid, Relief and Economic Security Act, passed last Friday, applies to churches, pastors, Christian nonprofits and small businesses.
“Churches and pastors have options available to them depending on their own situations and convictions,” GuideStone President O.S. Hawkins said in a statement. “While we would never tell a pastor what he must do, it is good that the options are available for pastors and churches who may wish to avail themselves of the options available through this legislation.”
GuideStone is an organization that equips churches, universities, hospitals, ministries and mission-sending organizations with products and services that promote financial health and spiritual wellness.
According to GuideStone’s legal team, the stimulus package makes available several forms of relief that can potentially benefit churches and other ministries such as payroll tax credits, tax deferrals, encouragement of charitable contributions, and small business loans.
“The Stimulus provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis,” the document reads. “The credit is available to employers whose operations were fully or partially suspended due to a COVID-19-related shutdown order, or gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.”
Churches and nonprofits, as well as Christian schools, are also eligible for small business payroll protection loans.
The stimulus package makes about $350 billion in government payroll protection loans available to small businesses and organizations that employ less than 500 people in one location. Loans will help borrowers pay things like payroll and employee-related expenses.
GuideStone notes that the purpose of the payroll protection loans through the Small Business Administration is to help organizations keep workers employed during the pandemic. GuideStone assures that tax-exempt entities are “specifically recognized as eligible.”
According to GuideStone, loans can be used to pay things like health insurance premiums, sick leave, mortgage payments, rent payments, debt obligations and utilities. Payroll protection loans can include a term of up to 10 years from the date of application with a maximum interest rate of 4 percent per year.
Payroll costs are defined as “salary or wages, payments of a cash tip, vacation, parental, family, medical, or sick leave, health benefits, retirement benefits, state and local taxes.” However, GuideStar warns that payroll costs and loan proceeds may not be used to pay salaries above $100,000 per employee.
Organizations eligible for the loan may borrow 2.5 times their average monthly payroll costs for the preceding 12 months from March 2019 to February 2020.
“For example, if the average payroll costs for the preceding 12 months were $20,000, the maximum amount of the loan would be $20,000 times 2.5 for a total of $50,000,” GuideStone explains. “The maximum amount available for a payroll protection loan is $10,000,000.”
GuideStone further notes that the stimulus package allows for self-employed pastors to apply for a payroll protection loan “under the same terms and conditions as other loan applicants.”
“For example, if a pastor’s average monthly salary for the preceding 12 months was $5,000 then the pastor should be able to apply for a loan in the amount of $12,500,” GuideStone details.
Ministries that take out a payroll protection loan can have all or a portion of the principle of the loan forgiven “in an amount equal to payroll costs, mortgage interest, rent or utility costs during the eight-week period following the origination of the loan.”
“The forgiven amount, however, may be reduced based on a formula that compares the ministry’s employment in prior pre-COVID periods with the number of employees and each employee’s wage or salary in the eight-week period following the origination of the loan,” GuideStone advises.
To apply for the payroll protection loan, applications must be submitted through an approved Small Business Administration lender.
Individually, pastors and ministry staff are eligible to receive the recovery rebate — a direct payment of up to $1,200 per individual, $2,400 for married couples and $500 per child — so long as they meet the requirements.
The rebate is for individuals who are not claimed as a dependent with an adjusted gross income of under $75,000, heads of household with an adjusted gross income of $112,500 and married couples whose income is under $150,000.
Those who earned over the income limits laid out for the rebate can qualify for a lower rebate payment depending on how much they earned over the threshold.
“The rebate amount is reduced by $5 for each $100 your income exceeds the phase-out threshold. The amount is completely phased-out if your income exceeded $99,000, $146,500 for head of household filers with one child, and $198,000 for married couples with no children,” GuideStone reports. “For a typical family of four, the amount is completely phased out for those with incomes exceeding $218,000.”
As for pastors and ministry staff who lost employment because of COVID-19, the stimulus package makes unemployment benefits traditionally unavailable to church or ministry employees available under certain circumstances.
The bill creates a temporary program that runs through Dec. 31 to provide payment to those not traditionally eligible for unemployment benefits who can’t work because of the public health emergency.
“The amount of the benefit is established by the unemployment insurance program in the state in which you live,” the document relays. “The stimulus, however, provides an additional $600 per week payment to each recipient of unemployment insurance as Pandemic Unemployment Assistance for up to four months and eliminates the requirement that unemployed individuals incur one week of unemployment before becoming eligible for benefits.”
The stimulus package provides an additional 13 weeks of unemployment benefits through Dec. 31.