Before the new rule was published, “I don’t think any diocese in the country would have qualified. [for small business loans]Reidy said. The bishop “has ultimate control over everything” in a diocese, including smaller entities such as parishes and Catholic charities, he said, and every diocese could have been considered by the government to be a large organization.
Yet the government now treats small entities as separate from dioceses “as long as they are tied together for religious purposes,” he said.
Not all dioceses are structured the same, warned Reidy. While in “the vast majority” of American dioceses, parishes and schools are separate nonprofit corporations, in some other cases the diocese is the only incorporated entity.
In these selected cases, Reidy said, a “potential obstacle” to a parish or school still receiving federal relief could be that they do not file payroll taxes and tax returns separately from the diocese, and would be therefore aggregated in the diocese.
A link between a parish and a diocese that is “practical” and not just religious in nature could also be a barrier to their getting help, Kniffin said.
Still, said Kniffin and Reidy, Catholic institutions should consider applying for the loans under a “good faith interpretation” of eligibility.
As the rules are “respectful” of the eligibility of religious organizations, Kniffin said, lenders are also urged “to accept good faith representations from applicants at face value.”
As long as Catholic groups have their own Employer ID number and 500 or fewer employees, they can apply on their own.
“I think all dioceses, with this new regulation, can do this certification in good faith,” said Reidy.
In its guidelines, the SBA emphasized that recipients of nonprofit loans may have a religious mission and will not be penalized if they only employ people who respect the organization’s religious mission.
Each beneficiary “will retain its independence, autonomy, right of expression, religious character and authority over its governance,” said the SBA. The loans can be used to pay the salaries of ministers and staff.
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The new rules require that loan recipients do not discriminate when providing goods and housing to the public. Depending on the interpretation of existing civil rights protections, certain charities could be declared ineligible for loans because they do not provide services in certain cases.
Examples could include a religious adoption agency refusing to place children with a same-sex couple, or a homeless shelter refusing to house a man who identifies as a woman with other women.
The SBA has stated that it “will not apply its nondiscrimination regulations in a way that imposes substantial burdens on the religious exercise of denominational loan recipients, for example by applying these regulations to the enforcement of ordinances. of church, sacraments, or religious practices, unless such enforcement is the least restrictive means of promoting a compelling government interest.
This question of upholding non-discrimination provisions is one that religious groups always ask themselves, Kniffin said.
Yet with a Catholic group providing social services, such as a soup kitchen or homeless shelter, they most likely received government funding and would therefore already be in compliance with federal regulations.
The ultimate goal of granting the loans, the SBA added, is to provide quick relief for many small businesses and nonprofits that have been severely affected by the recent coronavirus crisis.