The recently passed CARES Act creates a unique and short-term opportunity for OMN Churches to obtain federally backed loans up to 2.5 times their average monthly payroll costs and to have the loans forgiven, so long as they are used for proper purposes that virtually every OMN church with 500 or fewer employees qualifies. It is important that OMN Churches make sure they properly calculate the maximum amount they can borrow and that they position themselves to have as much of the loan forgiven as possible. In many cases, we expect that the full amount of the loans obtained will be forgiven.

“Paycheck Protection Program” Loans/Grants

In short, OMN churches are eligible because they employ fewer than 500 employees, are a 501(c)(3) and have been in existence for a full year prior to loan application.

The maximum loan amount is 2.5x the average monthly payroll costs for the one year period preceding the date of the loan.

Included payroll costs:
• Salaries and other wages
• Employer-paid health care benefits
• Employer-paid retirement benefits
• Employer-paid state and local payroll taxes

Not Included in payroll costs:
• Compensation of an employee in excess of an annual salary of $100,000
• Federal Payroll Taxes
• Compensation of an employee whose principal place of residence is outside of the United States
• Emergency sick leave or emergency family leave payments that qualify for a credit under the Families First Coronavirus Response Act

Loan funds may be used for:
1. Payroll Costs
2. Paid sick, medical or family leave
3. Mortgage interest (but not principal)
4. Interest on other debt obligations incurred before February 15, 2020
5. Rent & Utilities

Loan underwriting requirements:
1. Borrower was in operation on February 15, 2020
2. Borrower had employees for whom it paid salaries and payroll taxes or independent contractors as reported on Form 1099-MISC as of February 15, 2020
3. No personal guarantees and no collateral required
4. No recourse to any individuals unless the loan funds are used for an unauthorized purpose
5. Borrower must make a “Good Faith Certification” that basically states that the church did not take out another SBA loan to cover the same emergency costs, the church will retain its workers and the uncertainty of current economic conditions makes the loan necessary to support the ongoing operations of the borrower.

Loan underwriting requirements:
• Borrower is eligible for forgiveness of up to 100% of loan if it was used for above-mentioned included costs that began prior to February 15, 2020.
• Forgiveness amount is reduced by calculations pursuant to a multiple variable formula. As long as the money is used to retain employees and pay mortgage, rent, utilities then it is expected that 100% of loan will be forgiven.
• Payments are deferred for at least 6 months…up to 1 year
• Maximum maturity of 10 years
• Interest rate not to exceed 4%
• No prepayment penalty