Small Business Administration Issues Clarification on Faith-Based Organizations’ Participation in Loan Programs

Lenders and advisors alike have questioned whether churches, faith-based organizations, or organizations with religious affiliations are qualified to participate in Small Business Administration (SBA) loan programs offered as economic relief during the coronavirus outbreak. Previous SBA documentation indicated that “religious” entities were disqualified from receiving loans from the SBA. The CARES Act, signed into law on March 27, designated that 501(c)(3) entities and 501(c)(19) entities are eligible participants in the Paycheck Protection Program, but it did not specify if the “religious” status would make faith-based organizations ineligible.

Guidance recently released by the SBA indicates that the SBA will grant loans to faith-based organizations under both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Program. This guidance from the SBA also answers many other questions faith-based organizations might have regarding these programs.

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