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from the Small Business Administration

April 2nd, 2020

On April 2nd, 2020, the U.S. Small Business Administration (SBA) issued an interim final rule (the Initial Rule) announcing the implementation of sections 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). Section 1102 of the Act temporarily adds a new program, titled the "Paycheck Protection Program," to the SBA's 7(a) Loan Program. Section 1106 of the Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program. The Paycheck Protection Program and loan forgiveness are intended to provide economic relief to small businesses nationwide adversely impacted by the Coronavirus Disease 2019 (COVID-19). This interim final rule supplements the Initial Rule with additional guidance regarding the application of certain affiliate rules applicable to SBA's implementation of sections 1102 and 1106 of the Act and requests public comment.

This rule exempts otherwise qualified faith-based organizations from the SBA’s affiliation rules, including those set forth in 13 CFR part 121, where the application of the affiliation rules would substantially burden those organizations’ religious exercise. This exemption is required, or at a minimum authorized, by the Religious Freedom Restoration Act (RFRA) (P.L. 103-141), which provides that the “[g]overnment shall not substantially burden a person’s exercise of religion” unless the government can “demonstrate[] that application of the burden” to the person is both “in furtherance of a compelling governmental interest” and “the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. 2000bb1.

In laymen’s terms, this rule exempts the disclosure of affiliations, and it does not require the churches to aggregate their employee numbers together. This rule further ensures that the religious liberties of churches and religious charities are not hindered or violated through the acceptance of monies through the Payroll Protection Program (PPP).

PPP Affiliation Interim Final Rule: https://www.sba.gov/sites/default/files/2020-04/SBA%20IFR%202_1.pdf

SBA FAQs Concerning Faith-Based Organizations: https://sba.gov/sites/default/files/2020-04/SBA%20Faith-Based%20FAQ%20Final.pdf