Co-ops Now Eligible for Paycheck Protection Program Loans

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Last week, Congress enacted the Consolidated Appropriations Act, which, among other things, amended the Small Business Act to expressly make cooperative housing corporations (as defined in section 216(b) of the Internal Revenue Code) with fewer than 300 employees eligible for Paycheck Protection Program (PPP) loans. Condominiums, however, are not included. Eligible co-ops can receive loans of up to 2.5 times their average monthly payroll expenses.

In order to receive full forgiveness of the loan, at least 60% of the loan proceeds must be spent on payroll. The remaining loan proceeds may be used for certain other eligible expenses, including mortgage, utilities, operations, property damage, supplies, certain software programs and personal protective equipment for staff. Money available through the PPP is limited, so co-ops that are inclined to consider a PPP loan should contact their lenders as soon as possible, even though application forms are not yet available.

The Act directs that regulations be issued within 10 days of passage. Seyfarth is actively monitoring all aspects of federal COVID-19 business stimulus funding legislation. Additional updates will be provided once guidance becomes available. Visit our Beyond COVID-19 Resource Center for more information.