You may have heard that thanks to cooperative corporations being included in the new federal Stimulus Bill passed at the end of December, residential co-ops can now obtain loans under the Fed’s Paycheck Protection Program (PPP). While this is fantastic news for communities struggling with the ongoing financial impacts of the pandemic, it also raises lots of questions about applications, eligibility, and the rules around how funds are to be disbursed and allocated.
The rules that govern co-ops’ eligibility have finally been released by the US Small Business Administration (SBA). Here’s an overview:
First, the window for co-ops to seek a loan under the PPP is now open. In that regard, the Consolidated Appropriations Act, 2021 (the “Act”), signed into law on December 27, 2020, included a second round of PPP funding for those businesses who already got PPP funding — now known as a First Draw Loan — in the first round, and also permits a First Draw Loan for any business (now including co-ops, but not condominiums or homeowners associations) that did not get a First Draw Loan originally.
Under the program, First Draw Loans can presently be used to help fund payroll costs, including employee benefits. Funds can also be used to pay for mortgage interest, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and operational expenses.
Boards and managers should note, however, that the application form for a First Draw PPP Loan will require an officer of the co-op to swear and attest to the following representations: