Doing What’s Right


Religious groups got $108 million in local Paycheck Protection loans

Was it money well spent?
Posted: 4:49 PM, Jan 07, 2021
Updated: 2021-01-11 09:33:00-05
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CINCINNATI - Pastor Brian Tome was surprised in April when he learned Crossroads Community Church was eligible for a Paycheck Protection loan.

“We were going, 'wait a minute, really?' Churches are generally left out of those kind of programs,” he said.

Crossroads Pastor Brian Tome spoke at a Fountain Square vigil for Fifth Third Bank shooting victims in September 2019
A vigil was held on Friday for the victims in Thursday's shooting at Fifth Third Center. Brian Tome continues words of encouragement.

But Tome is convinced taxpayers got plenty of value from extending a $3.6 million forgivable loan to his congregation.

Although its buildings were closed from March through September, Crossroads actually increased employment during the pandemic – from 371 jobs when it applied for its loan in April to 403 when it requested loan forgiveness last month. The new employees helped the church beef up its community outreach.

“When you take a look at the value churches offer the social sector, it is enormous,” Tome said. “I think that the government at least this time around recognized that in this emotional crisis, financial crisis, spiritual – it’s a crisis of every kind of category possible – churches provide a meaningful service to the communities.”

That same story played out in churches all over the country, said Matthew Manion, director of the Center for Church Management at Villanova University. It published a study in December of 169 Catholic parishes on the east coast. Eighty percent of them secured PPP loans and 72% found new ways to connect with parishioners, including online masses, virtual prayer groups and outdoor gatherings.

“It kept people employed and it kept the ministry happening,” Manion said. “The ones that really seemed to thrive were able to tap into creativity and I think the PPP loans created the space for them to say, ‘How do we rethink our roles? How do we rethink our jobs in order to be able to do them in light of this pandemic?’”

At Crossroads, Tome said the expanded outreach spilled into the broader community. Here’s a partial list of activities in which the church engaged last year:

  • $1.8 million in donations to local nonprofits.
  • 79,000 meals to families who live near Crossroads locations.
  • 9,000 health kits to organizations that support vulnerable children and the homeless.
  • More than 3,000 care kits to senior citizens.
  • 37,500 homemade masks to frontline medical workers.

“Who knows the number of additional suicides that would take place, who knows the number of additional divorces that would take place, who knows how many people would be hungry if it weren’t for our church’s engagement?” Tome said. “And that’s just ours. That’s not all the churches all around the region.”

Constitutional boundaries

However laudable, those achievements do not justify giving churches special treatment to enable their use of PPP loans to fund their ministries, said Alison Gill, vice president, legal and policy, for American Atheists Inc. in Cranford, New Jersey.

“I don’t think anyone would deny that churches do amazingly good work,” Gill said. “However, that work can be done and be funded by these programs without necessarily going to religious activities by the churches.”

In a letter to the SBA and in blog posts, Gill’s group has argued that the SBA is violating the U.S. Constitution by agreeing not to enforce longstanding SBA rules that prohibited religious groups from receiving loans before last year and exempted churches from new SBA rules that restrict loans to organizations with 500 employees or less.

She also claims the new rules make the Paycheck Protection program more vulnerable to fraud. She points to examples like Daystar Television, which reportedly bought a jet within weeks of receiving a $3.9 million PPP loan in April, and ASLAN International Ministry in Florida, which was named in a federal civil forfeiture complaint alleging PPP loan fraud in December.

The ministry has a Cincinnati connection.

Ohio business records show ASLAN was incorporated in 2005 by Michael Becker of Glendale, Ohio. In court documents last month, federal agents quoted a witness, identified by the initials M.B., as saying he incorporated the company on behalf of Evan Edwards, ASLAN’s chairman. The federal complaint alleges Edwards used false information to obtain an $8.4 million PPP loan from First Home Bank of St. Petersburg, Fla. M.B. told the agents he “was not aware his name was still being used on business records and he did not authorize anyone to use his name on any such records.” The company was canceled as an Ohio corporation in 2015, but re-instated by Edwards in 2018, state records show.

WCPO tried to reach Becker through a phone number and email tied to his current address in Cuyahoga Falls, but he did not respond.

Gill said the case is evidence that fraud involving churches can be difficult to spot.

“They are not subject to the same sort of oversight as other sorts of businesses or nonprofits,” Gill said. “They don’t have to file with the IRS ahead of time, nor do they have to file annual tax updates. So, there’s very little government oversight, and because of this they’re especially susceptible to fraud.”

Digging into the numbers

The WCPO I-Team has been looking for local evidence of fraud in all kinds of government stimulus programs since April. We didn’t find it in the $108 million in Paycheck Protection loans issued to Greater Cincinnati churches and religious schools last year. We did find some evidence that religious groups in Greater Cincinnati spent PPP money more efficiently than other kinds of employers.

For every job that applicants said they were protecting with their Paycheck Protection loans, local faith-based organizations received about $7,900, according to the I-Team’s analysis of SBA data. That’s about 17% less than the $9,500 average loan amount per job for the entire universe of more than 30,000 PPP loans in the Tri-State.

But those numbers don’t tell the whole story of what a PPP loan meant to places like St. Xavier High School, which got a $3.8 million loan in April with an application that reported 295 jobs would be preserved.

“We’re spending a lot of money on our program here,” said St. Xavier President Tim Reilly. “And there’s no way we wanted to compromise our program if we didn’t have to, so this loan was really a great safety net.”

But St. X did more than keep teachers employed; it also made sure that more than 100 students who live in poverty had food on the table and reliable Internet service so they could keep learning when the school building was closed.

“To me, that’s a perfect example of why faith-based organizations are an important part of the picture, because we’re doing a lot more than just paychecks,” Reilly said.

For those still worried about church and state issues, Tome offers this:

“All that money comes from taxpayers. Our staff are all taxpayers. Everybody who gives any money to Crossroads, they’re all taxpayers. And all those taxpayers would like to see things they’re a part of be healthy.”

The fine print

The First Amendment of the U.S. Constitution says, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Until this year, the SBA interpreted that to mean loans were not allowed for “businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs.”

But the SBA redefined that interpretation in April, when it published new guidelines for Paycheck Protection loans:

“Because those regulations bar the participation of a class of potential recipients based solely on their religious status, SBA will decline to enforce these subsections and will propose amendments to conform those regulations to the Constitution.”

The same document made churches exempt from the so-called affiliation rule, which required most borrowers to count employees from affiliated companies when calculating whether they meet the 500-employee-limit loan eligibility. That’s why the Catholic church, which has more than 1 million employees, was able to qualify for thousands of loans with more than $1.4 billion.

“SBA will not assess, and will not permit participating lenders to assess, the reasonableness of the faith-based organization’s good-faith determination that this exception applies,” said the SBA guidelines.

Congress had a chance to address these issues last month, when it passed a new round of Paycheck Protection loans. And it sided with the SBA's interpretation with this statement in the Consolidated Appropriations Act of 2021:

"It is the sense of Congress that the interim final rule of the Administration entitled 'Business Loan Program Temporary Changes; Paycheck Protection Program' - 85 Fed. 11 Reg. 20817 (April 15, 2020) - properly clarified the eligibility of churches and religious organizations for loans made under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)."