The U.S. Small Business Administration (SBA) and the Treasury Department have announced that the Paycheck Protection Program (PPP) will re-open the week of Jan. 11 for new borrowers and certain existing PPP borrowers. For the first time, housing cooperatives will be eligible for a slice of the $284 billion in forgivable loans that are part of the new $900 billion stimulus bill that was signed into law on Dec. 27.
The SBA has issued two “interim final guidances.” The first guidance includes an overview of eligibility requirements for the loans. The second guidance covers borrowers who wish to return for so-called “second draw” loans under the program, which was launched last spring as part of the CARES Act. So far, the PPP has funneled $525 billion to small businesses, supporting more than 50 million jobs.
“Initially,” the SBA says in a press release, “only community financial institutions will be able to make first draw PPP loans on Monday, Jan. 11 and second draw PPP loans on Wednesday, Jan. 13. The PPP will open to all participating lenders shortly thereafter.”
Banks, community-based lenders and microloan funds participate as PPP lenders. A list of these lenders can be found here. Interested applicants should review this list to see if their lender is already participating, and if not, which lenders are participating in their area. Not all of these lenders will sign up to do this new round of loans, so co-op boards will need to contact the lender to confirm.
The loans are intended to cover expenses through March 31, 2021. Loan recipients cannot have more than 300 employees, (which will disqualify few New York co-ops). The maximum loan will be $10 million. Co-ops can receive loans up to 2.5 times their average monthly payroll costs; and in order to receive full forgiveness, 60% of the money must go toward payroll and 40% toward certain covered costs, including mortgage, utilities, operations, property damage, suppliers and worker protection.
The inclusion of co-ops in the new stimulus bill was the fruit of a long campaign by a broad coalition of New York-based advocates, who were able to convince local, state and federal politicians that housing cooperatives, a relative rarity outside the five boroughs, deserve to be treated like other small businesses.
“It’s extraordinary that such a niche type of housing is included in this legislation,” says Geoffrey Mazel, a partner at the law firm Hankin & Mazel and legal adviser to the Queens-based Presidents Co-op & Condo Council, a leading member of the coalition. “A small part of the nation outside New York City even knows what a residential housing cooperative is. This is the result of a concerted effort by advocates and politicians.”
Mazel singled out for praise Paul Vallone of the New York City Council, U.S. Reps. Grace Meng, Tom Suozzi and Nydia Velazquez and, particularly, U.S. Sen. Charles Schumer, who is a shareholder in a Brooklyn co-op.
Also in on the lobbying effort was the Council of New York Cooperatives & Condominiums. Mary Ann Rothaman, the council’s executive director, echoed the high praise for Schumer. “He worked his tail off to make sure co-ops were included in this bill,” she says, adding that she was disappointed that efforts to qualify condominiums and homeowners associations for the loans were not successful. “We tried every way we could to get them included,” she says. “But there’s a perception that condos and HOAs are higher end, which of course is not always the case. Getting co-ops eligible for the loans was all we could get – and for New York, it’s a lot.”
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