You may have heard that co-ops can now obtain loans under the federal government’s Paycheck Protection Program (PPP) as a result of their being included in the new Stimulus Bill. The rules governing the inclusion have finally been released by the US Small Business Administration.
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 that already got a PPP Loan (now known as a ‘First Draw’ loan) and also permits a First Draw Loan for any business (which now includes co-ops – but not condominiums or homeowners associations) which did not get a First Draw loan originally.
Under the program, First Draw loans can presently be used to help fund payroll costs, including 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 expenses for operations.
You should note, however, 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:
2. Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant, and;