CARES Act Advice for Clergy and Congregations

Latest Update:

Helpful Documents for Applying for Forgiveness
AICPA Resource Page for Forgiveness (includes step by step instructions and loan calculator spreadsheets)

Webinars: Paycheck Protection Program for Parishes and Missions, moderated by Paul Alexander

Webinar recordings and slides can be accessed below:

Wednesday, May 27
PPP Loan Management and Forgiveness webinar recording
PowerPoint Slides

Thursday, April 30
PPP Loan Management and Forgiveness webinar recording
PowerPoint Slides

Wednesday, April 8
The CARES Act webinar recording
PowerPoint Slides (same for April 6 and 8 webinars)

Monday, April 6
The CARES Act webinar recording
PowerPoint Slides (same for April 6 and 8 webinars)

Past Updates

Loan Forgiveness:
SBA Releases official Loan Forgiveness Form!
On May 15th, the SBA issued a formal Forgiveness application (Available here).
In addition, they made the loans a bit more flexible. Specifically:
  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.

We recommend a separate bank account for managing these funds and keeping detailed invoices and receipts.

New Funding: The PPP program has reached its current funding capacity and most banks are no longer able to process new applications or finalize any applications currently in the bank process.
A second round of funding appears to be on the horizon so continue to work with your banks to finalize your paperwork and to gather any additional information you might need.  That way you will be ready should new funding occur.
Congress passed and the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion stimulus package designed to provide stability and relief to businesses and individuals.


For the Episcopal Church in Colorado

This FAQ will be updated as we continue to receive information.

This is not considered legal advice but our best information possible.

Your bank will need to confirm your application, and this does not supersede any requirements from your lending entity.

Are Churches Eligible?

Yes. Please contact Paul Alexander at if your bank is saying religious institutions are not eligible.

Where can I get the SBA form?

Follow this link.

How do I fill out the form?

See this example.

For parishes:  Use your official church name.

Under owner type: Applicant is XXX Church, A Colorado Nonprofit Corporation, No Equity Shares.

For missions:   Use your official church name.

Under owner type: Applicant is XXX Church, an unincorporated Colorado nonprofit organization

How do I calculate my church’s salary expense?

Total your full yearly salaries, medical and dental benefits, pension payments, church paid state and local payroll taxes. You must exclude any direct salary expense above $100,000 per employee.

After totaling these expenses, divide this number by 12. For the form, multiply this number by 2.5.

Do I include part time and contract employees?

You may include part time employees but not contract employees.

Are clergy regarded as “employees” or “self-employed?

For purposes of the CARES act only, they are considered “employees”.

How is “housing” or a housing allowance to be treated?

There are mixed opinions on whether or not housing is eligible.  Please work with your banks.

The CARES Act refers to payroll as a permitted expense in disbursing a Paycheck Protection Program loan. It defines “payroll” to include “the sum of payments of any compensation with respect to employees that is a . . . salary, wage, commission, or similar compensation.”

Does this definition include a housing allowance? There is no definitive answer to this question and this explains the confusion that exits. Consider the following points:

  • Housing allowances are certainly a component of compensation or salary. This is demonstrated by the fact that if the technical requirements for designating the allowance are not satisfied, the IRS will assert that the entire allowance constitutes taxable income that must be so reported on the minister’s W-2 form and the church’s 941 form.
  • The housing allowance is an exclusion from income taxes. Exclusions recognize that taxable compensation has been earned, but for policy reasons is being treated as nontaxable.
  • The housing allowance is a real payment of compensation to a minister. This is demonstrated by the fact that it is nontaxable in computing income taxes only if it is actually used to pay for housing expenses. The tax code’s re-characterization of housing allowances as a nontaxable exclusion reflects semantics, not reality. While the allowance may not be reported on a minister’s W-2 form, it nonetheless constitutes a component of compensation that is used to pay for housing expenses.
  • The characterization of housing allowances as “compensation” is supported by the fact that the tax code treats housing allowances as fully taxable in computing ministers’ self-employment taxes.
  • The CARES Act defines “payroll” to include “the sum of payments of any compensation.” This is a broad definition that reasonably encompasses housing allowances.
  • The fact that section 107 of the tax code excludes housing allowances from taxable income in computing income taxes demonstrates they constitute taxable income, but that for policy reasons Congress has removed them from the definition of taxable income.
  • In an official SBA publication addressing several questions and answers pertaining to the CARES Act, the SBA states: “Under the Act, payroll costs are calculated on a gross basis . . . .” In other words, the critical term compensation must be interpreted broadly.
  • Until definitive guidance is provided by the SBA or the courts, churches will need to discuss this with their lender, the SBA, or their United States Senators and members of Congress.
In filing Form 941, housing is not going to show up since it is not taxable income. So, how do we document housing allowance as a payroll expense with the lender, who requires Form 941 for the PPP loan application?

Until this issue is clarified by the SBA, churches should provide their lender with a letter documenting the points made in the response to the previous question.

Follow this Link to a Treasury Update

Who is considered the “owner”?

See sample SBA form.

“Applicant is St. XXX Episcopal Church a CO Nonprofit Corp.”

When is the loan forgiven?

Please consult your bank.

In general, eight weeks after receipt of the loan or after June 30th.

Interest is included in forgiveness.

How do I Apply:

Contact your local bank to see if they are participating. If not, contact Paul Alexander for a list of banks who are.

You will need to fill out the SBA form (Click here) as well as any other documents required by your bank. Each bank will likely require different materials. For example these may include:

  • W-3,  or IRS Forms 940, 941,944.
  • Financial statements from 2019
  • Date the church started
  • Legal name of the church
  • Number of employees
  • Gross annual revenue for 2019
  • 2019 quarterly payroll tax reports
  • Monthly payroll costs for the last 12 months
  • Average monthly church expenses (funds used for utilities, rent, or mortgage interest)
  • Total health insurance premiums paid under a group health plan
  • Retirement plan funding paid by the company owners

Will we have to repay the loan?

The Act includes provisions that the PPP loans can be entirely or partially forgiven so long as certain conditions are met, including that staff payroll is not reduced or terminated during the eight week period following the origination of the loan or provided that a church rehires employees by June 30 who were suspended or terminated between 2/15/20 and 4/26/20.

What can we use the money for?

The money must be used for certain payroll costs, rent, utilities, mortgage interest only (not principle), and interest on other debt obligations incurred before Feb. 15, 2020. No more than 25% of the loan may be used for non-payroll items.

We have funds in savings, does this make us ineligible?


Is the grant taxable in any way?


Do we need the approval of our vestry, the Bishop, or the Standing Committee?

Rectors and Wardens of parishes can agree to start the application process without Vestry approval but should not sign any loan documents until they have obtained a Vestry resolution of approval.

Mission Vicars and Bishop’s Wardens can agree to start the application process without Bishop’s Committee approval but are not permitted to sign any loan documents without our Bishop’s approval.

The PPP loans are not secured by any collateral, so, except as stated above in the case of missions, the Bishop and Standing Committee do not need to approve these loans.

Sample Vestry Resolution

Sample Mission Resolution

Who Can I Contact for More Information?

The Bishop has appointed Paul Alexander, Missioner for Development and Financial Stewardship, as a resource person from the Office of the Bishop.