Paycheck Protection Program – Frequently Asked Questions
As Small Business Administration (SBA) lenders have started to process Paycheck Protection Program applications, INUMC has received a number of common questions. Below is a list of questions and answers as of Tuesday, April 7, 2020. Please note that this appears to be a fluid process and the procedures continue to evolve.
This information below is not offered as professional financial or legal advice. You must obtain a lawyer or qualified financial adviser for professional advice.
Q: How much of my loan will be forgiven?
A: You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.
Q: Are there other factors that may affect loan forgiveness?
A: You will also owe money if you do not maintain your staff and payroll.
- Number of staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
- Level of payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-Hiring: You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020.
Q: What are the terms of the loan?
A: Loan funds that do not qualify for forgiveness will have the following terms:
- Interest rate: 1% fixed rate
- Term: 2 years
- No prepayment penalties or fees
Q: Our church has less than 1 full-time equivalent employee (3 part-timers). Can we even apply?
A: Which employers are eligible for a loan? Employers with 500 employees or less who:Were in operation on February 15, 2020; and
Had employees for whom they paid salaries and payroll taxes – for this purpose, ‘employee’ includes individuals employed on a full-time, part-time, or other basis.
Q: Who are the “owners” of the church?
A: Since the church doesn’t have “owners,” leave the [Applicant Ownership – List all owners of 20% or more of the equity of the Applicant] section blank.
Q: I am being asked for our bylaws or articles of incorporation or a document that gives approval for our trustee chair to sign on behalf of the church. We are not incorporated. What should we do?
A: INUMC recommends using a copy of your annual NP20 form and/or the copy of the Certification of Trustees as proof of eligibility to sign.
Q: The SBA lender is asking for confirmation of 501(c)(3) status. How can we get that?
A: To receive a group ruling letter specific to your church, visit umgroupruling.org. After filling out the online application, you will be able to print/save the letter.
Q: We are incorporated but I don’t have a copy of our articles of incorporation. How can we get a copy?
A: The following link will provide you with access to the church’s articles of incorporation. https://inbiz.in.gov/BOS/PublicSearch/Search
Q: Do the loan application signatories incur any personal liability?
A: No, they are simply authorized representatives of the church.
Q: Does payroll include the pastor’s accountable reimbursement or professional costs?
A: No, those costs would not be included.
Q: Would we include payments made to contractors?
A: No, anyone that receives a 1099 has the ability to file for their own loan. (All pastors should be receiving a W2 as an employee of the church).
UPDATE [May 19]: The following link contains information on the PPP loan forgiveness as well as the SBA’s newly released loan forgiveness application. We hope that you find this information to be useful and informative. Any or all parts of this information are subject to change without notice, and it may not remain current. Please obtain a lawyer or qualified financial advisor for professional advice.