A goal of Disciples Church Extension Fund (DCEF) is to keep the congregations we serve aware of the financial relief options available to them. During the coronavirus pandemic, one such resource is the Economic Injury Disaster Loan (EIDL) of which the application deadline is fast approaching.
This federal lending program can benefit churches that have exhausted their working capital or anticipate doing so due to the prolonged challenges presented by COVID-19. EIDL loans are available through the Small Business Administration, but the deadline to apply for one is December 21, 2020.
The dollar amount available through these loans is a factor of your church’s 2019 total annual income and operating expenses and is intended to provide six months of working capital. The interest rate on such loans is 2.75% and payments are amortized over 30 years. The first loan payment is deferred for one year and there are no pre-payment penalties on EIDL loans. However, unlike with the government’s Paycheck Protection Plan (PPP), the EIDL program offers no loan forgiveness.
To prevent fraud, each applicant must provide the personal information, including social security number, of a responsible party to be connected to the loan. A credit background check will be performed on this person and the loan could be denied on this basis. In providing their information, this individual is not personally guaranteeing the loan nor will they carry any liability for it.
The EIDL application process is simple and done on the Small Business Association website. Needed documents include your federal identification number, 2019 financial statements, and an accurate employee count as of December 31, 2019. Many applications will be approved and funded by Automated Clearing House (ACH) within five business days.
Before deciding to apply for an Economic Injury Disaster Loan, congregational leadership should consider the church’s current financial health, operating cash on-hand, potential impacts on giving through another possible pandemic shut down, and operational funds needed through June, 2021. All options, including loan terms and conditions, should be considered.