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Small Business Administration Must Fix New Rules to Prevent Unconstitutional Church Bailouts

Washington, D.C.—Today, the religious equality watchdog organization American Atheists submitted comments to the Small Business Administration, opposing the agency’s interim final rules for the Paycheck Protection Program because they roll back long-standing constitutional protections for the separation of religion and government.

“Religious liberty is built on the idea that government entanglement with religion can be a profound threat to individual rights, too often leading to religious oppression,” wrote Alison Gill, Vice President for Legal and Policy at American Atheists, in the comments. “A core principle of religious liberty is that the coercive taxing power of the government cannot be used to force citizens to support a religion that is not their own.”

In April, Congress passed the CARES Act, creating an initial pot of $350 billion in forgivable loans under the Paycheck Protection Program (PPP). The Small Business Administration suddenly “declined to enforce” long-standing regulations that prevented direct funding of religious activity, opening up these forgivable loans — essentially free government money — to houses of worship.

“In the CARES Act, Congress recognized the importance of church/state separation protections by, for example, ensuring that higher education recipients could not spend funding on ‘sectarian instruction, or religious worship,’” explained Gill. “Congress did not stipulate in the CARES Act that PPP forgivable loans could not be extended to houses of worship because, until this point, SBA already had in place sufficient church/state separation protections.”

In its comments, American Atheists urged SBA to issue a new interim final rule providing that loans forgiveness under PPP is not available for any funds used for inherently religious activities. Funds ineligible for loan forgiveness should include 1) the salary of any clergy or other staff engaged in inherent religious activity 2) any amount spent on rent or mortgage interest payment for facilities related to sectarian instruction or religious worship, and 3) any utilities costs for facilities related to sectarian instruction or religious worship, said the religious equality watchdog group. 

“SBA now has an opportunity to correct the constitutional deficiencies and misstatements of law in their original guidance and issue new rules for this important program,” said Gill. “Even during a pandemic, SBA cannot be allowed to violate the critical protections for religious freedom in the U.S. Constitution.”

Read the full comments below.

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