Mount Zion Baptist Church in Nashville has come to a $70,464.39 settlement with the U.S. government over their use of a Paycheck Protection Program (PPP) loan, according to the Department of Justice. The church was accused of inappropriately utilizing the funds to make mortgage principal payments, a move that stands in violation of the stipulations laid out for the use of PPP loan money. The settlement agreement resolves allegations that the church "unjustly enriched itself by improperly using the PPP loan," as stated by the U.S. Attorney’s Office for the Middle District of Tennessee and reported by WKRN.
In April 2020, Mount Zion Baptist Church secured a PPP loan amounting to $967,600, with the church asserting that the money would only be utilized for approved expenses under the PPP guidelines. However, filings from the a federal court revealed that the church made two separate mortgage principal payments on May 29, 2020, totaling the exact amount of the settlement figure. Funds intended for mortgage principal are not sanctioned uses of the loan under the guidelines established—a point of contention leading to the recent resolution. These filings were also affirmed by a report from The Tennessean.
Additionally, the church applied for full forgiveness of its PPP loan in May 2021, an application that was approved by the Small Business Administration (SBA) on May 17, 2021, which included the portions of the loan in question. Even though Mount Zion Baptist Church has agreed to the settlement, this is not an "admission of liability" on part of the church. A statement on behalf of Mount Zion Baptist conveyed that the church has been cooperative with the DOJ's review and maintained that some of the PPP funds were used to pay mortgage interest—which aligns with the conditions of the PPP loan. This information was brought to light by WSMV.
Despite the settlement, it remains pivotal to note that the church's actions do not necessarily reflect the intent behind the PPP loans, which were designed to support businesses and organizations in maintaining operational costs, like payroll and utilities, amidst the financial turmoil of the pandemic. As institutions across the country grapple with the economic fallout, the careful scrutiny of loan use is a testament to the ongoing effort to ensure that pandemic relief funds are used in a manner that upholds the spirit and letter of the law.
