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1 1 (April 9, 2020)

handle is hein.crs/govcwzr0001 and id is 1 raw text is: ees Resarh Servi kM- Eligibility of Religious Organizations for the CARES Act's Paycheck Protection Program April 9, 2020 The recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act) contained a number of provisions authorizing the Small Business Administration (SBA) to provide economic relief to small organizations. One such provision, Section 1102 of the CARES Act, established the Paycheck Protection Program (PPP), which expands the SBA's authority to guarantee loans under Section 7(a) of the Small Business Act, discussed in more detail in this CRS Report. Another provision, Section I10 of the CARES Act, expands the SBA's authority to grant Economic Injury Disaster Loans (EIDLs) under Section 7(b)(2) of the Small Business Act, discussed in this CRS Report. After the CARES Act was signed into law, there was some uncertainty about whether religious organizations, including churches and other houses of worship, would be eligible for the new PPP or EIDL relief. On April 3, 2020, however, the SBA issued a Frequently Asked Questions (FAQ) document clarifying that faith-based organizations, including houses of worship, are eligible to receive SBA loans under the PPP and EIDL programs. This Legal Sidebar discusses legal considerations related to religious organizations' eligibility for SBA aid. Specifically, this Sidebar explores possible considerations under the Establishment and Free Exercise Clauses of the First Amendment to the U.S. Constitution, both of which are implicated when public funds are provided to religious organizations. Statutory and Regulatory Authority Governing Section 7(a) Loans According to the SB A, the 7(a) loan program is the agency's primary program for providing financial assistance to small businesses. Section 7(a) of the Small Business Act authorizes the SBA to make and guarantee certain types of loans. In practice, the SBA does not provide direct loans under its 7(a) programs, but works with third-party lenders. Prior to the CARES Act amendments, the statute provided that 7(a) loans were generally available to small business concerns, defined in regulation as certain small for-profit businesses. Another regulation outlining what businesses are ineligible for 7(a) loans excludes businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting. When the SBA adopted this ineligibility regulation in 1996, the agency explained that the exclusion of primarily religious businesses was driven by Establishment Clause concerns. Congressional Research Service https://crsreports.congress.gov LSB10445 CRS Lega Sidebar Prepaed for Membeivs and Cornm ittees o4 Co.qrg ess ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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