Suburban congregations, private schools received millions in PPP loans

At least 187 churches, synagogues, faith-based private schools and other religious institutions in 60 suburbs received more than $166 million in forgivable loans from the federal government.

That's according to a Daily Herald analysis of Paycheck Protection Program loan recipients released by the U.S. Small Business Administration last week. The low-interest loans are forgivable if the recipients use at least 75% of the funds to cover personnel costs for at least eight weeks during the COVID-19 pandemic.

Combined, the 187 faith-based organizations in the North and West suburbs reported the loans helped retain at least 12,400 employees.

South Barrington-based megachurch Willow Creek received a loan of between $5 million and $10 million, according to the report. That was the largest loan amount among the entities in the suburban analysis.

The loan allowed the church to retain 353 jobs and not lay off employees. But church officials said furloughs of some of their staff are planned in the coming weeks.

The Willow Creek Association, recently renamed the Global Leadership Network, also received a loan of between $1 million and $2 million.

"When the stay-at-home mandate was first ordered, we decided to continue paying our staff, regardless of their ability to carry out their normal or full work duties," Willow Creek leaders wrote in a statement this week. "This pandemic has lasted longer than anticipated, and so we sought ways to continue caring for our staff in a time when giving is understandably down."

Church spokeswoman Liz Schauer said the loan was used to pay for salaries at all levels of the church's operations.

Harvest Bible Chapel based in Rolling Meadows, Benet Academy in Lisle, Carmel Catholic High School in Mundelein, and Lutheran Child and Family Services of Illinois in Oakbrook Terrace each received a loan of between $2 million and $5 million.

Fifteen other religious entities received loans ranging between $1 million and $2 million, 66 received loans in the range of $350,000 to $1 million, and another 100 received $150,000 to $350,000 loans.

Congress made special dispensation to allow religious institutions to participate in the loan program, an action that concerned some groups.

"The American government at the federal level has never subsidized houses of worship to pay for the salaries of their clergy, which we believe the First Amendment clearly forbids," said Rob Boston, senior adviser at Americans United for Separation of Church and State. "With government funding comes government oversight; distorting the relationship between religious institutions and government serves neither."

While employees of religious institutions are not exempt from paying taxes, the institutions don't have to pay income taxes like for-profit businesses do. That means, if the loans are forgiven, religious groups won't be affected financially like other corporate entities will.

The Internal Revenue Service and Treasury Department Secretary Steve Mnuchin have reiterated that while the loans are tax-exempt even if they are forgiven, businesses can't write off payroll and related expenses covered by the loans, according to an analysis of Treasury Department rulings issued by the U.S. Chamber of Commerce.

"This means some businesses may have higher taxable revenue in 2020," according to the chamber report.

U.S. Rep. Brad Schneider, a Deerfield Democrat, said the CARES Act and PPP loan program were instrumental in the country staving off financial ruin.

"In hindsight there are things we might do differently," he said, "but we needed to make sure we were providing people linkage to their employers so they could keep their homes and help their families."

More than 27,000 businesses and organizations in Illinois received parts of the nearly $660 billion in PPP loans intended for employers with fewer than 500 workers, including the Daily Herald. Millions of employers throughout the country that received loans of less than $150,000 were not named in the SBA disclosure.

Though religious organizations have not previously been eligible for federal small business loans, the SBA specifically said they could receive PPP and could qualify locally in spite of affiliations with larger ministries.

Media reports indicate U.S. Roman Catholic churches accounted for between $1.4 billion and $3.5 billion in PPP loans nationwide.

Among schools, Saint Viator High School in Arlington Heights, Marmion Academy in Aurora, Timothy Christian in Elmhurst, St. Francis High School in Wheaton and Judson University in Elgin each received loans of between $1 million and $2 million, the SBA reported.

Judson officials said the university incurred significant costs to move students to remote learning after the outbreak and lost revenue from canceled mission trips and space rentals.

"The PPP funding allowed us to keep all faculty and staff at full-time employment status," Judson spokeswoman Mary Dulabaum said.

Public schools in Illinois are receiving grant funding from the CARES Act that private schools aren't directly entitled to receive, though districts may have to share some of those funds with the private schools under the Equitable Services Act, Illinois State Board of Education officials said.

Local recipients of loans between $150,000 and $350,000 include Elgin's Northwest Bible Baptist Church, where during the initial outbreak of COVID-19 leaders refused to stop holding school and in-person services in defiance of a state public safety order.

Harvest Bible Chapel leaders announced they had received a $2.55 million loan. The church has dealt with leadership and financial upheaval in the last year after its founding pastor, James MacDonald, was ousted following accusations of fiscal mismanagement.

"The majority of this loan should be forgiven, and any amount not forgiven is due for repayment over the next two years and incurs interest at a rate of only 1%," church leaders wrote in a May 15 financial update to its flock. "True blessings from God."