As Big Employers, Churches Help Business With PPP Loans – Baptist News Global
The COVID-19 pandemic has confronted American communities with all sorts of unprecedented decisions and dilemmas, including whether to accept government funds to cover payrolls.
But in the face of falling revenues, many churches have done just that – despite recognizing the historical principle of the separation of church and state.
All of this weighed on, to some extent, Travis Collins, pastor of the First Baptist Church in Huntsville, Alabama, last spring when his staff were considering applying for the US Small Business Administration’s Paycheck Protection Program (PPP).
“I was one of the more hesitant during the borrowing talks,” he said. “But I gave in because I just don’t know what the future will bring.”
First Baptist took the funds in late April, mainly to cover wages for the 42 employees at the weekday early education department. The loan also helped with payroll for an additional 38 church workers, said Jud Reasons, senior pastor at First Baptist.
“With no kids around and no income coming in, we wanted to send a paycheck to every single employee,” explained Reasons.
Payroll coverage is the goal of the loan program created by the Coronavirus Aid, Relief, and Economic Security Act known as CARES, which was passed by Congress in March. PPP was developed to help small businesses retain workers and has been extended to religious and nonprofit organizations.
According to the SBA, the loans are repaid in full if 60% or more is used for payroll. Other acceptable uses include payments for mortgage interest, rent, and utilities.
But accepting the 1% interest loan still posed a dilemma in Huntsville.
“It’s a big deal for our Baptist brand, and it’s been a big deal for us,” said Collins. “And if we weren’t living with such uncertainty, we would have thought twice at least.”
Uncertainty is usually the deciding factor in federal fundraising, said Phill Martin, CEO of The Church Network, an interdenominational association focused on church administration.
“The vast majority of our communities have taken the PPP route. You applied and the vast majority got the money. They saw the money as a security blanket. “
Some have changed their minds, he added. “Some made the decision to return the money because they weren’t seeing the declines in donations that they originally expected.”
Among those who held on to the funds, most applied them to employee salaries, especially in large congregations with multi-shift staff between church, daycare, and schools.
Martin said he saw both sides of the constitutional issue. “It is valid not to take out the loan because of the separation of church and state.” But PPP is available to all faith communities so that no religion is placed above the other. And the economic argument is also valid, he said.
“Another reason it makes sense for churches to use these resources is because of the real purpose of the bill, which was to keep people employed and active in the economy.”
“It has advanced the ministries”
The inclusion of religious groups in the SBA program surprised many – including denominations, said Michael Martin, president of the Evangelical Council for Financial Accountability.
That shouldn’t be the case, however, considering how many people churches employ, he added. “People often don’t think of churches and nonprofits as employers or the significant role they play in the economy.”
The federal government estimates that religious groups, including churches, account for around 10 to 12% of private sector employment, he said. This suggests strong public interest in religious and nonprofit organizations that keep staff.
“The PPP program was a small experiment and it’s too early to assess its overall effectiveness,” said Martin. “But it kept a lot of companies going and brought a lot of ministries forward.”
A survey by ECFA in June found that around 80% of nonprofit respondents and 60% of church respondents had participated in PPPs. And the organization’s online resources dedicated to the program were in high demand.
“Since the CARES act, we’ve had three webinars that have been attended by 13,000 people. That is historical for us. “
Thought should also be given to the importance of churches keeping staff members during the pandemic, said Bill Wilson, founder of the Center for Healthy Churches.
The consequences for dismissed ministers can be immense because their calling and skills are often far too narrow for the general labor market.
“When clergymen are out of work, it’s not like a restaurant worker who can find a job in another restaurant,” he said. “When a minister becomes unemployed, it is difficult for him to return to work.”
And there are considerations about the ministry. Wilson said the churches maintained food supplies, daycare and other vital services through PPP loans. “I’ve seen churches do remarkable things to alleviate the suffering the pandemic is causing.”
That, in turn, has a much broader spiritual impact during the COVID-19 pandemic. “The ministry is part of what is helping the nation through the crisis,” he said.
“We don’t have a crystal ball”
Still, there was a “clear minority” of communities that deliberately passed on PPP, Wilson said.
For a few it was the separation of church and state. “They said it felt like it was violating a fundamental concept for them.” Others said they had reserves, foundations, and other resources that made the loans unnecessary.
A little bit of all of this describes the Ardmore Baptist Church in Winston-Salem, NC
“We had a lot of discussions about it, but decided we didn’t need to pursue this,” said Senior Pastor Tyler Tankersley.
Clinging to the principle of the separation of church and state was part of the decision. But steady contributions and good reserves also made the decision easier.
“We’re in a historic neighborhood, our campus is debt free, and we have a history of solid administration and smart finance committees,” he said.
Faced with this situation, Tankersley said, the Church does not want to take the funds it needs from struggling parishes.
But that doesn’t mean Ardmore Baptist is free from the chaos of the pandemic. During a recent planning meeting, church leaders set the next three months, instead of the next twelve, and personal worship is on hold.
“If you’d told me on March 10th what March 15th looked like, I wouldn’t have believed you,” he said.
That same uncertainty led First Baptist in Huntsville to apply for and accept the loan – and happy about it, Collins said.
“We don’t have a crystal ball so we don’t know how long it will take. But this (loan) gave us security. “