Ministerial Housing Allowance Determined to be “Payroll Costs”

Since the passage of the CARES Act on March 27, 2020, there has been much debate concerning whether ministerial housing allowance could be included as a part of “payroll costs.”

“Initially, the Small Business Administration (SBA) resisted providing guidance on this important issue under the Paycheck Protection Program (PPP),” stated Art Rhodes, president of the Church of God Benefits Board. “Since ministerial housing allowance makes up a large part of many ministers’ compensation, the importance of this issue was stressed to both the SBA and to members of Congress by different faith-based groups, including the Church of God.”

According to Rhodes, on April 26, the SBA issued an updated frequently asked question (FAQ) document that specifically addressed this issue:

Question: Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs? Answer: Yes. Payroll costs includes all cash compensation paid to employees, subject to the $100,000 annual compensation per employee limitation.

This answer by the SBA clarifies that ministerial housing allowance can be used for calculating the “payroll costs” to get a PPP loan, as well as the “payroll costs” that are used for calculation purposes in the “forgiveness” portion of the loan.

“A unified faith-based community was instrumental in getting this favorable result,” Rhodes concluded.

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