Home > Journals > LAWREVIEW > Vol. 95 > No. 3 (2022)
In the early months of 2020, COVID-19 had a swift and profound impact on public health, the economy, state and local governments, and businesses across the United States. In response, on March 27, 2020, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to protect the American people from the worsening public health crisis and mitigate the resulting economic downturn. Additionally, within the CARES Act, Congress established the Paycheck Protection Program (“PPP”), which expanded the Small Business Administration’s (“SBA”) authority to guarantee forgivable loans to eligible small businesses. Among other prerequisites, the PPP required qualified small businesses to have 500 or fewer employees. As evidenced by the maximum employee cutoff, the PPP was intended “to keep Main Street open,” preserve American jobs and employment, and subsidize payroll expenses for those small businesses that were devastated by the economic shutdown. The PPP loans could be used for payroll costs, as well as rent, utilities, and interest on mortgage payments. To qualify for forgiveness, at least sixty percent must have been used for payroll expenses.
Through the PPP, Congress modified the eligibility requirements for SBA loans from solely small, for-profit businesses to include nonprofit organizations. The PPP was silent, however, as to whether faith-based nonprofit organizations were incorporated within those revised eligibility requirements. As a result, the U.S. Conference of Catholic Bishops lobbied the federal government so that Catholic parishes across the country would qualify. Following the initial uncertainty concerning nonprofit religious organizations’ eligibility, on April 3, 2020, the SBA released an FAQ document signifying that, “notwithstanding any regulations to the contrary,” faith-based organizations, including churches, could receive forgivable loans under the PPP. The SBA unilaterally asserted that “no otherwise eligible organization” would be disqualified from receiving a loan due to its “religious nature, religious identity, or religious speech.” Prior to this guidance on religious organizations’ eligibility, the SBA had explicitly excluded organizations primarily tasked with “teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting” from receiving governmental loans, repeatedly citing Establishment Clause concerns.
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