Monday, April 06, 2020

SBA Says Churches and Other Religious Organizations Are Now Eligible For SBA Loans

On April 3, the Small Business Administration announced that faith-based organizations, including houses of worship, are eligible to receive SBA loans regardless of whether they provide secular social services. (FAQ Document) (Press Release).  This applies both to the Paycheck Protection Program designed to keep small business workers employed, and to the Economic Injury Disaster Loan Program which provides small businesses and non-profits working capital. The FAQ Document says in part:
...[N]o otherwise eligible organization will be disqualified from receiving a loan because of the religious nature, religious identity, or religious speech of the organization. The requirements in certain SBA regulations— 13 C.F.R. §§ 120.110(k) and 123.301(g)—impermissibly exclude some religious entities. Because those regulations bar the participation of a class of potential recipients based solely on their religious status, SBA will decline to enforce these subsections and will propose amendments to conform those regulations to the Constitution. Although 13 C.F.R. § 120.110(a) states that nonprofit entities are ineligible for SBA business loans (which includes the PPP program), the CARES Act explicitly makes nonprofit entities eligible for the PPP program and it does so without regard to whether nonprofit entities provide secular social services.