Dear Colleagues, Friends and Clients,

The current SBA PPP Loan process continues to be fluid and is changing daily.

As a follow up to my emails this week, the SBA did release additional guidance late last night and also uploaded an official SBA PPP loan application to their website.  (See Attached Guidelines published last night).

It is different from the applications that have been posted on the SBA site this week. 

The updated and official SBA PPP loan application can be found here at this location: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp#main-content

“Push-back” is happening from groups like the ACLU trying to argue that churches do not qualify.  Thus far, it has not gained much traction.  However, it will be imperative that when churches apply they clearly document their tax-exempt status under 501 (c)(3) regulations.

1.     Incorporated Churches with Determination Letter.    If a church has filed its 1023 Recognition of Exemption and received a determination letter, this determination letter will need to be provided along with other documentation listed below.

2.     Churches that do not have a Determination Letter.  For those churches that have not filed for this determination letter, we urge you to contact us to provide this documentation for future issues like these.  File for Recognition of Exemption now.

3.     For churches that are incorporated, but have not filed for the Recognition of Exemption.  Corporate documentation will be required as listed below.  In addition, we can provide a “Legal Opinion Letter” citing the US Constitution and settled case law that affirms your status as a tax-exempt organization under the US Constitution.  As a church, you are in fact tax-exempt and, in our opinion, qualify under the SBA PPP loan requirements to file for funding.

4.     For churches that are not incorporated.  It will be imperative that you have bylaws and organization documents to prove that you are, in fact, a church. We strongly urge you to incorporate for many reasons.  In addition, our “Legal Opinion Letter” may prove vital in arguing your qualification to receive funding as a tax-exempt 501 (c)(3) entity under the US Constitution.

Please contact our office to provide any assistance during this time:

1.     To file your Form 1023 Recognition of Exemption with the IRS

2.     To incorporate your church to provide clear evidence of your existence as a legal entity.

3.     To provide a “Legal Opinion Letter” of your tax-exempt status under the US Constitution.

In addition to the above documentation, begin assembling the following documents and information available and ready to review with your banker:

  • Most recent IRS Form 941 (quarterly Federal Income tax return)
  • January 2019 through February 2020 payroll expenses
  • Complete 2019 financials (P&L and balance sheet) 
  • Articles of incorporation for each borrowing entity
  • By-laws or operating agreement for each borrowing entity
  • Payroll expense verification documents
    • IRS forms 940 and 941
    • Payroll summary report with corresponding bank statements
    • Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
    • 1099s (if you are an independent contractor)
  • Certification that all employees live within the United States 
    • If any do not, provide a detailed list with corresponding salaries
  • Trailing twelve-month profit and loss statement (as of the date of application) for all applicants
  • Most recent mortgage or rent statement
  • Most recent utility bills

Our office can act as an agent on your behalf in dealing with the SBA and assist you in completing the loan process.

Please contact if we may be of assistance in any way.

Respectfully,

Stephen D. Lentz, Esq.

Stephen D. Lentz, Esq.

Senior Counsel

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381 Edwin Drive

Virginia Beach, VA 23462

(757) 352-2237 Office
(757) 352-2220 Fax
slentz@ectlawyers.com 

www.EastCoastTrialLawyers.com

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