PAYCHECK PROTECTION LOAN: Is Your “Good Faith Certification” Good Enough?—If Not, Will They Consider it as Fraud?

March 27, 2020 the President signed the CARES Act into law. This law provided stimulus money for small businesses, including Churches and non-profits. The purpose was to lessen the pain and agony that many employees would encounter due to loss of income by their employers.
 
As with any Government program, rules change as the game is played. The initial ruling was that all applicants would be Presumed to be an impacted and the borrower is presumed to have been adversely impacted by COVID–19. The initial bill further stated: During the covered period: The Administrator shall “Consider each eligible recipient that applies for a covered loan to be an impacted borrower.”

One Bad Apple Spoils the Whole Barrel

Because many larger corporations, who really did not need the funds, discovered some loop holes, the Government began applying additional restrictions and continued to emphasize that there must be a “necessity” of need for the money.
 
Because of the abuse of the program by some, the Small Business Administration, in conjunction with The Treasury Department has determined that there will be some audits of those receiving the funds—especially of those receiving two million dollars or more.
 
In addition to the latest rulings, those who may have embellished their “necessity” of need on their “Good Faith Certification” would be able to return the funds with no questions asked.

Will My Church Be Audited?

It is probable that you will be audited. It would behoove you to make sure you do not face the auditors alone. You need expert help when dealing with any Government sources. They are not on your side.

Should My Church or Ministry Return the Funds?

That question is simple to answer if you really didn’t need the money and applied for it simply because you thought it would be free money. If this is the case, you may want to re-evaluate your “Good Faith Certification.”
 
For those who really believe you had “necessity” of need, you may want to answer this checklist carefully and honestly to make your final determination.
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• 1.Has COVID-19 negatively impacted the amount of donations my Church or Ministry is receiving? Yes No


• 2.Because of reduction in contributions would my Church or Ministry have to lay off staff, reduce their pay, or stop some ministry programs for the next 6 – 12 months without receipt of these funds? Yes No


• 3.Will my Church or Ministry use at least 75% of the funds for payroll, keep staff employed for the eight weeks following receipt of our loan, and/or rehire any who have been laid off because of COVID-19? Yes No


• 4.Will my Church or Ministry use no more than 25% of the funds to pay mortgage interest, rent, or utilities for the eight weeks following receipt of your loan? Yes No


• 5.My Church or Ministry does not have any unrestricted funds (i.e. Building Fund) that could be accessed to fully fund the Church or Ministry. Yes No

​In the event you are audited, if you answered yes to all of the above questions, you will may be okay. Please do not try to represent your Church without the expert assistance of Chitwood & Chitwood!  
 
Another issue the Government will consider, should they audit you, is your intent. No one can forecast the severity of impact upon our Churches for the next several months. In the event an audit would determine you didn’t need the funds, they may not consider it fraud. Most likely the Government would just seek repayment.

Why You Need Us!

Government regulations are like a mine-field. Unless you know how to successfully navigate those waters you could be in danger. For more than 80 years Chitwood & Chitwood has successfully navigated the seas of Government regulations for our clients.
If you want to learn how to connect with us, call 800-344-0076. We are the best friend a Church, Ministry, or Pastor can have. Call now.
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By Dr. Michael Chitwood

 

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Our  Church Management Conferences  will arm you with the information you must have to shield your Church or Ministry from IRS intrusiveness; teach you how to get your Taxes to the lowest possible rate; and daily operate your Church or Ministry within IRS acceptable guidelines.

Our  Conferences  have been taught across the Nation for over 48 years. Because of the Penalties, Fines, and even Imprisonment that the IRS imposed on many Churches and Pastors, Dr. Chitwood felt led by the Holy Spirit to become a buffer between Churches, Ministers, and the IRS.

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