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For some churches, paying back PPP loans is better than forgiveness

For some churches, paying back PPP loans is better than forgiveness
When Michigan’s governor required church buildings to cease assembly in individual on March 16 final 12 months, Kenton Sanders, director of operations at Mars Hill Bible Church, rapidly did some worrying math.

About 40% of donations to the megachurch in Grandville, Michigan, got here throughout in-person providers that drew some 1,750 adults, college students and youngsters weekly. With in-person providers shutting down, donations would absolutely tumble. If that occurred, the church must lay off a few of its employees.

“It was originally of the pandemic, we had simply gone on-line, and had no thought what was going to occur,” he mentioned.

So, like greater than 120,000 church buildings and different spiritual organizations nationwide, Mars Hill utilized for assist by way of the Paycheck Safety Program, the emergency mortgage program created by the CARES Act, a $2.2 trillion reduction and stimulus package deal handed by Congress in March 2020. Underneath the PPP, the Small Enterprise Administration would funnel funds to native banks, which might make loans to employers of their communities.

Mars Hill’s $295,000 mortgage, permitted on April 14, 2020, would defend two dozen jobs on the church, a minimum of for a couple of months.

However inside a month after the mortgage was permitted, Sanders seen that giving had truly gone up. Along with common choices that got here in on-line, church members additionally contributed to a benevolence fund, often known as “the white bucket challenge,” to assist neighbors in want throughout the pandemic.

After speaking with different Mars Hill leaders, Sanders known as up the financial institution and returned your entire quantity of the mortgage.

Mars Hill is one among a small variety of spiritual organizations that took out massive PPP loans solely to return the funds with out ever withdrawing a penny or to pay again the mortgage again in full. In accordance with an evaluation by Faith Information Service of information from the SBA, 13,408 spiritual teams, primarily church buildings, had been permitted for loans of $150,000 or extra. Of these, 100 paid the loans again with out asking for the loans to be forgiven. Fewer than 50 different teams had been permitted for the loans however didn’t withdraw the funds.

The repaid loans vary from $4.37 million to $150,500 and totaled simply over $66 million. These repaying the loans embrace 99 Christian teams and one Muslim group.

Lakewood Church is a nondenominational Christian megachurch in Houston. It is one of the largest congregations in the U.S., occupying a former sports arena. Photo courtesy of Creative Commons
Lakewood Church is a nondenominational Christian megachurch in Houston. It is likely one of the largest congregations within the U.S., occupying a former sports activities area. Picture courtesy of Inventive Commons

Not less than one well-known congregation, Lakewood Church in Houston, pastored by televangelist Joel Osteen, lately introduced that it’ll pay again a $4.43 million greenback PPP mortgage. A church spokesman mentioned the mortgage will probably be paid again with curiosity over 60 months.

RELATED: Yes, the Catholic Church benefited from federal PPP loans. Good for them.

Greater than 8,800 spiritual teams have requested for his or her loans to be forgiven — as this system was designed to permit, and a comparatively widespread follow for all PPP debtors. The standing of one other roughly 4,500 remaining loans has not but been reported to the SBA by native banks.

All advised, 11,823,594 PPP loans had been permitted, for a complete of $799.8 billion.

For Philadelphia Baptist Church, primarily based in Deville, Louisiana, getting permitted for a PPP mortgage offered peace of thoughts when such peace was in brief provide. Pastor Philip Robertson known as the early days of the pandemic probably the most traumatic time of his greater than quarter-century as a pastor.

Pastor Philip Robertson. Courtesy photo
Pastor Philip Robertson. Courtesy picture

Whereas the church had some reservations concerning the mortgage and whether or not it will include authorities strings hooked up, Robertson mentioned, “We wished to be sure that we had been capable of proceed to pay our employees and never must endure catastrophic monetary implications.”

From the start, church leaders determined to pay the $181,170 mortgage again if they might. The funds had been put aside, mentioned Robertson, and to be spent provided that they had been wanted.

When giving remained regular, the church repaid the mortgage in July of 2020. Paying the mortgage again price the church about $400 in curiosity, mentioned Robertson, a small value to pay for the peace of thoughts that got here with the mortgage.

Robertson mentioned he’s grateful that the church was eligible for the mortgage — regardless that it was funded by the federal authorities — grateful that the mortgage turned out to not be wanted and grateful for the continued giving of church members.

“The folks of God give as a result of they offer out of obedience to the Lord and wished to assist the ministry and work of their church,” he mentioned. “And that was a precedence for them. Even within the midst of a worldwide pandemic.”

Paul Spilker, lead govt pastor at School Park Church in Indianapolis, which paid again a $1,157,100 mortgage, was additionally shocked by the generosity of church folks throughout the pandemic. The mortgage, he mentioned, allowed the congregation to pay its employees throughout a time of nice uncertainty. When giving to the church turned out to be increased than anticipated, he mentioned, church leaders determined to pay it again.

“We thought, right here’s a sworn statement to the generosity of our folks,” Spilker mentioned.

Pastor Paul Spilker. Photo courtesy of College Park Church
Pastor Paul Spilker. Picture courtesy of School Park Church

Spilker and different leaders of church buildings that repaid the loans mentioned it was the proper factor for his or her church. However they perceive why different teams made totally different selections.

To qualify for mortgage forgiveness, church buildings and different organizations needed to certify that there was vital financial uncertainty once they utilized for the mortgage — which was the case for almost each for-profit and nonprofit group in america.

There are some indications that congregations averted main fiscal decline throughout the COVID-19 pandemic. Greater than half of the congregations in a fall 2020 research from Lake Institute on Religion and Giving at Indiana College-Purdue College Indianapolis mentioned that giving had both stayed the identical or gone up. Few (14%) mentioned they needed to lay off employees, whereas two-thirds utilized for a PPP mortgage.

Of their mortgage software, Mars Hill requested for sufficient cash to pay the salaries of 24 staffers. All advised, the PPP loans to spiritual teams had been meant to pay salaries of 1.5 million staffers, with half of them at teams that borrowed greater than $150,000.

Allison Gill, vice chairman of American Atheists, mentioned she appreciates spiritual teams that paid again their PPP loans relatively than asking for forgiveness.

“It exhibits an appreciation for the separation of church and state,” she mentioned.

Nonetheless, American Atheists and different secular teams expressed concern over this system — particularly if spiritual teams utilized for forgiveness. That primarily turned loans into grants to pay the salaries of non secular leaders, mentioned Nick Little, vice chairman and common counsel of the Heart for Inquiry, one other atheist group.

Little mentioned that having authorities funds paying the salaries of pastors, rabbis, monks and different leaders was “constitutionally troubling.”

The 2012 Nationwide Congregations Research discovered that about 25% of congregations had mortgages or different debt. Congregations that described themselves as extra conservative (22.3%) had been much less prone to say they’d debt than people who had been extra liberal (43.9%).

Uncertainty for a lot of spiritual organizations, in the meantime, is way from over. At Mars Hill, Sanders mentioned that the employees stays intact, and because the pandemic has eased, about 300 folks now present up for weekend providers. However others proceed to attend solely on-line. That makes long-term planning troublesome.

“The laborious half is that we don’t understand how many individuals now we have in our church anymore,” he mentioned.

Nonetheless, he’s grateful the PPP mortgage was repaid. “I’m actually proud to be a part of a church that mentioned, ‘No, we don’t want it — we’re going to give it again.’”

RELATED: Willow Creek, LifeChurch among churches that received millions in PPP loans


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