Before the new rule was issued, "I don't think any diocese across the country would have qualified [for small business loans]," Reidy said. The bishop "has ultimate control over everything" in a diocese including smaller entities such as parishes and Catholic charities, he said, and each diocese could have been considered by the government to be one big organization.
Yet the government now treats the smaller entities as separate from dioceses "so long as they're tied together for religious purposes," he said.
Not all dioceses are structured the same, Reidy cautioned. While in "the vast majority" of U.S. dioceses, the parishes and schools are separate non-profit corporations, in some other cases the diocese is the only incorporated entity.
In these select cases, Reidy said, a "potential obstacle" to a parish or school still receiving federal relief might be that they do not file payroll taxes and tax returns separately from the diocese, and thus would be aggregated into the diocese.
A tie between a parish and diocese that is "practical" and not just religious in nature might also pose an obstacle to their obtaining relief, Kniffin said.
Yet, both Kniffin and Reidy said, Catholic institutions should consider applying for the loans under a "good-faith interpretation" of eligibility.
As the rules are "deferential" to the eligibility of religious organizations, Kniffin said, lenders are also being directed "to accept applicants' good-faith representations at face value."
As long as Catholic groups have their own employer identification number and 500 or fewer employees, they could apply on their own.
"I think all dioceses, with this new regulation, can make that good-faith certification," Reidy said.
In its guidance, SBA emphasized that non-profit loan recipients can have a religious mission, and will not be penalized for employing only people who abide by the religious mission of the organization.
Each recipient "will retain its independence, autonomy, right of expression, religious character, and authority over its governance," SBA said. Loans can be used to pay the salaries of ministers and staff.
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The new rules do require that loan recipients do not discriminate when they provide goods and accommodations to the public. Depending on the interpretation of existing civil rights protections, some charities might be ruled ineligible for loans because they do not provide services in certain cases.
Examples of this might include a religious adoption agency refusing to place children with a same-sex couple, or a homeless shelter refusing to house a man identifying as a woman with other women.
The SBA says it "will not apply its nondiscrimination regulations in a way that imposes substantial burdens on the religious exercise of faith-based loan recipients, such as by applying those regulations to the performance of church ordinances, sacraments, or religious practices, unless such application is the least restrictive means of furthering a compelling governmental interest."
This question of compliance with nondiscrimination provisions is one that religious groups are still asking about, Kniffin said.
Yet with a Catholic group providing social services, such as a soup kitchen or a homeless shelter, they most probably have received government funding and would thus would already be in compliance with federal regulations.
The ultimate goal of providing the loans, SBA added, is to ensure quick relief for many small businesses and non-profits which have been severely impacted by the recent coronavirus crisis.