WV-WMD Synod :: COVID-19
(3 April 2020)
CARES Act information is changing daily as the affect Federal
agencies attempt to interpret and implement it and those of us on
the outside attempt to navigate that implementation. Consequently,
we will endeavor to give you the best information and advice we have
at the moment, but this may change as even Federal agencies adapt
From the Synod Treasurer
Synod Treasurer Solberg has provided two communiques, the first
dealing primarily with the Economic Injury Disaster Loan and the
second dealing with details related to the Payroll Protection
Program. We recommend that congregational treasurers read both.
Texts of Communique from Treasurer
Program: Clarification Letter (2 April 2020)
Payroll Protection Program (PPP) funds may be available through your
local bank. This may be an easier way to access the same type of
funds available through the Economic Injury Disaster Loan (EIDL)
program I wrote about earlier this week. The EIDL is facilitated
“through Washington,” the PPP is facilitated through your local
The Payroll Protection Program (PPP) has definitions that are
changing daily. I am interpreting what I have seen since as of the
afternoon of April 2, 2020. Institutions will begin accepting PPP
loan applications on Friday April 3, 2020, and the money wont last
The Payroll Protection Program, like the EIDL, can be used to cover
payroll and some other essentials. The PPP, unlike the EIDL, is
leveraged at your local bank branch of almost any national or
semi-national bank. Think Huntington, BB&T, United Bank, etc.
Call one of these banks and tell them you would like to get added to
the list of small business and non profits looking for one of these
loans. Generally, these are 10-year loans with a 4% interest rate
(note that while this loan may be easier to obtain than the EIDL, it
has a slightly higher interest rate). Payments are deferred for 6
months, and the portion used in the first 8 weeks after the loan
origination to maintain staff levels, rent, utilities, etc., is
forgivable. Again, not laying off staff is key to receiving full
What I think might be a most significant difference for our churches
between the PPP and EIDL is that the PPP, being facilitated by
banks, leaves your local loan officer as the “policing agent,” and
interpreter of which expenses are eligible and which are not. I am
hearing from other Synod Treasurers that pastors and council
presidents are having some success explaining how housing allowance
plays into a pastor’s total defined compensation, and convincing the
loan officer that this is coverable expense, despite not being
taxable income. I haven’t heard a lot of folks say that the SBA is
denying them coverage of the housing allowance portion of a pastor’s
compensation, but I suspect that that is because the SBA is still
slow moving. These banks are more agile.
So a key component in being successful in receiving a loan that will
cover all of your payroll expenses is being able to articulate how
housing allowance is a part of a pastor’s total defined
compensation. If you can sell that story to your local loan officer,
you can probably get a PPP loan that will cover total defined
compensation for 8 weeks.
You can seek a loan for up to 2.5x your monthly payroll, but only 8
weeks of payroll, plus those other essential operating expenses,
will be forgivable. Anything that remains becomes that 10 year loan
at 4% interest.
You can participate in both loan programs, but you can’t “double
dip,” trying to use the same payroll dollar to justify two-dollars
of loan forgiveness.
I am going to include a list of documents that your, your treasurer,
and/or your book keeper may want to start compiling if you want to
apply for one of these loans, but know that you don’t need all this
information compiled before you pick up the phone.
The first think you should do is call your local institutions, ask
them if they are participating in the Paycheck Protection Program
loan, and ask to get in line for consideration.
You may be asked to gather these documents.
- 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
- Company Summary W2 for 2019 or annual report from your payroll
- Last 12 months of internal payroll reports beginning with your
last payroll date and going backwards 12 months.
- Payroll report must show the following for the time period
- Gross wages Paid time off
- Vacation pay
- Family medical leave pay
- State and Local taxes assessed on the employee’s
- 1099s for 2019 for independent contractors that would
otherwise be an employee of your business.
- Do NOT include 1099s for services.
- Documentation showing total of all health insurance premiums
paid by the Company Owner under a group health plan.
- Include all employees and the company owners.
- Document the sum of all retirement plan funding that was paid
by the Company Owner (do not include funding that came from the
employee’s out of their paycheck deferrals).
- Include all employees, including company owners.
- 401K plans, Simple IRA, SEP IRAs.
Economic Injury Disaster Loans (31 March 2020)
Church leaders of the WV-WMD Synod,
The recent Stimulus package, called the CARES ACT, has provisions
that might be applicable to our congregations. The ELCA has compiled
a summary here:
I want to give you some brief information, to the best of my
ability, on the Paycheck Protection Program.
Section 1105 of the CARES ACT creates a loan forgiveness program
where loans given to small business and non-profits, including
religious non-profits, can be forgiven if those funds are used to
cover compensation (both wage & benefits) of employees during
the covered period (March 1, 2020-June30, 2020), as well as debts
paid during this period. Employees must have been hired by, and
debts incurred by, February 15, 2020 to be eligible.
In other words, if you take out a $10,000 loan through the Small
Business Administration (SBA), and can justify that entire amount
against the qualified expenses (payroll and debts between March 1
and June 30), the entire loan can be forgiven.
It appears as though “debts” includes ongoing financial obligations
such as rent, interest on mortgage payments, and some essential
This is an incentive to keep people employed during this time, so if
you do lay off/fire employees during this time, your eligibility for
loan forgiveness decreases. A church that lays off its Choir
Director right now will still be eligible for prorated loan
forgiveness, but only a church that does not lay off anyone will be
eligible for 100% loan forgiveness. Any amount not forgiven will
incur interest at the non-profit rate of 2.75%
I spent two hours on the phone with the SBA today to get some
answers. Unfortunately, they don’t have many yet, because, in their
own words, they’re “making it up as we go.” … and aren’t we all,
By this weekend, they hope to have more details worked out. Here are
some of the questions I asked that they are working out answers to:
The SBA worker I spoke with seems to think that questions like this
will either be answered generously, because the intent of the CARES
ACT was to cover as many people as possible, or will be left up to
individual case workers to be determined on a case-by-case basis. He
stressed that the best thing any of us can do right now is fill
out the preliminary loan application on the SBA website at https://covid19relief.sba.gov/
and get in the “digital queue,” immediately. This won’t mean
you’ve accepted a loan yet, it just means you’re on your way to
getting a case file started. There is no harm in getting a case file
started. He stressed that the longer you wait to get an
application in the longer the wait for assistance will be if your
approved. If you’re not approved, you will likely just need to
produce more information to get approved.
- Religious Organizations have staff who do secular tasks (like
secretaries) and staff who do religious tasks (like pastors).
Are both types of staff covered by this loan forgiveness
- Are both W-2 receiving employees and 1099 receiving employees
Applying today does not disqualify you from other programs, but if
you accept and receive a loan that will disqualify you from some of
the other programs mentioned in the summary document above (ELCA
Link). This loan forgiveness program will be the most lucrative
program for most if not all agencies.
The application, which I have already filled out for the Synod,
isn’t long, and doesn’t make a lot sense for non-profits like us.
The SBA worker explained that they basically copy and pasted that
application from somewhere else because they had to turn on a dime
Friday night. But here’s the important part: get your church or
other non-profit in the digital queue. If there is assistance
available for our churches and agencies the sooner, we are in the
digital queue the better. Just grab your FEIN number and what
financial information you can, including banking information, and
fill out the application to the best of your ability. Save the
application number at the end.
I don’t have all the answers yet (and neither does the government),
but it only costs a few minutes to fill out the application found at
Other ELCA links you might take a look at:
More information will be forth coming as I receive it.
West Virginia-Western Maryland Synod, ℅ St. Paul
Lutheran Church, 309 Baldwin Street, Morgantown, WV 26505
304-363-4030 + Porter@WV-WMD.org