Of faith and funds: 13 Wilmington-area churches tapped into government PPP loans

The coronavirus pandemic has thrown a wild card into the planning of almost every enterprise that relies on money for survival. Count churches among those who’ve seen their financial futures become a little less certain.

While things seem to have stabilized for many churches since the dire warnings of April, more than a dozen Wilmington-area churches applied for and received loans this spring under the U.S. Small Business Administration’s Paycheck Protection Program.

The $600 billion plan, passed April 3 by Congress in response to the pandemic, was designed to help businesses keep their workers employed during the COVID-19 crisis.

Thirteen churches in Brunswick and New Hanover counties are listed as having received PPP loans of between $150,000 and $350,000.

PPP in Wilmington: Click here to see a list of loans for area places

In Wilmington, loans went to First Baptist Church, First Presbyterian Church, Lifepoint Church, Masonboro Baptist Church, Northside Baptist Church, Pine Valley Methodist Church, Port City Community Church, St. Andrew’s Covenant-Presbyterian Church and St. Mary’s Catholic church.

Elsewhere, loans went to Wrightsville United Methodist Church in Wrightsville Beach; First Baptist Church of Leland; Generations Church in Southport; and Scotts Hill Baptist Church near the Pender/New Hanover County line.

All of the churches except for Lifepoint Church, which is listed as a corporation, are listed as non-profit organizations.

The deadline to apply for a PPP loan was Aug. 8, so churches on the list right now might not represent all of the area churches that applied for or will ultimately receive loans.

The PPP loans are low-interest loans. The SBA will forgive them, however, if those who received them can prove they have retained a certain number of employees and that the money has been used for approved expenses, like rent or utilities.

In the past, churches were not eligible for SBA loans but those rules were waived in the face of the pandemic.

For Generations Church in Southport, a contemporary church that’s been around for about 15 years, lead pastor Troy Knight said applying for a loan came with some trepidation: “We struggled with it because of the separation of church and state.”

He said some in the church worried that if they took the money, the government could come along later and say the church had to “do things a certain way” or even believe certain things.

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Churches don’t pay federal taxes, and Knight said he wondered about the fairness of receiving federal money. The church’s 18 full and part-time employees do pay federal taxes, however, and Knight said that’s what ultimately convinced him that Generations should apply for the loan.

“In the very beginning we weren’t sure how bad it was going to be,” said Susan Dykes, financial administrator with St. Andrews Covenant-Presbyterian Church in Wilmington, which employs 30 people. Once it became clear that the pandemic “was going to be more of a long-term thing,” Dykes said, St. Andrews applied for the PPP loan.

When the pandemic shuttered churches this spring, “At the very first it looked like it would be pretty scary in terms of giving,” said Wes Hunter, senior pastor at Masonboro Baptist Church, which dates its history in Wilmington back more than 160 years. “The church operates on a razor-thin margin in the best of times,” he said, with much of its money coming in each Sunday in the form of offerings by the congregation.

Masonboro Baptist Church hasn’t held in-person services in nearly five months. Still, “giving is down, but not so much that we’re freaking out,” Hunter said.

For Knight, of Generations Church in Southport, it’s been a similar story.

"We haven’t seen the drop-off (in giving) we anticipated,” Knight said, and Generations has even attracted some new givers via online services. Generations re-started in-person services in July, although Knight said attendance is a fraction of the 1,400 people a week he was seeing pre-pandemic.

And while the financial need for most churches -- some of which were already struggling with shrinking denominations before the pandemic -- seems clear, some have been critical of churches getting federal loans.

In an April column for Forbes.com, Peter J. Reilly noted that not only are churches treated very different from other nonprofits in a financial sense, but also, in terms of the PPP loans, “There is very little transparency required of churches and this program does not require much in the way of scrutiny.”

A big concern for area churches, and why many of them chose to take loans, is that some of them run schools, many of them preschools.

When the pandemic hit, employees of houses of worship, religious schools and religious organizations affiliated with houses of worship were not eligible for unemployment benefits if they were laid off. That’s because churches are exempt from unemployment laws and don’t typically pay into the unemployment system. Those restrictions were largely waived this spring, however, around the time independent contractors became eligible for unemployment benefits in North Carolina.

Hunter said Masonboro Baptist’s Noah's Ark Children's Center is almost like a community service for families with working parents who rely on it. Before the pandemic, the center was responsible for about 100 kids per week.

"We don’t make any money on it,“ Hunter said. ”We try to break even.”

At the same time, however, “We feel responsible for our employees.”

For MBC, Hunter said, the Paycheck Protection Program “for us, it is exactly what its name says.”

That is, the money was used almost exclusively to pay employees of the school, whose budget, he said, dwarfs that of the church, which only has three employees.

The story is much the same at First Baptist Church of Leland, which has been around for nearly 100 years. Senior Pastor Steve Ellis said that almost all of its PPP loan went to pay teachers at its Leland Christian Academy. Ellis noted the teachers who stayed got less than they would have on unemployment.

Both children’s centers have since reopened. Hunter said at Noah’s Ark, they’ve got about two-thirds the number of children they had before the pandemic. Some of the two dozen full and part-time teachers have decided not to return for now.

If not for the PPP loan, Hunter said, “the church would’ve been fine. But for the school, it would’ve been a disaster.”

Contact John Staton at 910-343-2343 or John.Staton@StarNewsOnline.com.