Financial Relief for Churches That Did Not Receive a PPP Loan

Financial Relief for Churches That Did Not Receive a PPP Loan

Ross Williams


Dear Treasurers, Finance Chairs and Pastors,

Many of our churches have been unable to obtain loans through the Paycheck Protection Program (PPP) sponsored by the Small Business Administration. 

For those churches, it is important to remember that the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides additional relief options, including an Employee Retention Credit and a Payroll Tax Deferment Option.

The Employee Retention Credit is a fully refundable tax credit that provides up to $5,000 per employee for the church.  Note: this credit is NOT available to churches that received a PPP loan.  The credit is applied against the FICA taxes paid by the local church.  It is only available for wages paid from March 13, 2020 through December 31, 2020, and the amount of the credit is limited to 50% of up to the first $10,000 of wages paid to each employee during that time period.

If a church does not have enough FICA taxes payable to fully offset the amount of the credit, it can receive a cash refund for the remaining amount.  A church is eligible for the employee retention credit if it carried on operations during calendar year 2020 and either (1) has had to fully or partially suspend operations during a calendar quarter in 2020 “due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019” or (2) has experienced a decrease in gross receipts of more than 50% in a calendar quarter in 2020 when compared to the same calendar quarter in 2019.  Condition "1" above has been met for our churches.

The Payroll Tax Deferment Option allows employers to defer the employer’s share of FICA taxes incurred from March 27, 2020 through December 31, 2020.  Note: an organization that has received loan forgiveness on a PPP loan is NOT eligible for this deferment option.   At least 50% of any deferred amounts must be paid by December 31, 2021, with the remaining balance due on December 31, 2022.

To access the IRS Q&A about the Employee Retention Credit  Click Here

For more information about the Payroll Tax Deferment Option Click Here