Consolidated Appropriations Act Brings Changes to PPP for Cooperatives

January 7, 2021 Advisory

On Dec. 21, 2020, Congress passed the Consolidated Appropriations Act which, among other things, included changes to the Paycheck Protection Program (PPP). As described in our prior advisories – Condos and Co-ops and the Paycheck Protection Program and Condo Co-op PPP Eligibility Advisory Update – the PPP was created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide forgivable loans to benefit small businesses adversely impacted by the COVID-19 pandemic.

The changes to the PPP specifically confirm that housing cooperatives are eligible for PPP loans, clarifying an issue affecting the first round of loans. No change was made regarding condominiums and homeowners associations, so their eligibility remains uncertain, and we refer you to our April 6, 2020, advisory for additional information.

While the Small Business Administration (SBA) rules and guidance have not yet been issued, based on the summary issued by the pertinent Congressional Committee, the changes impose new rules for borrowers which already received an initial PPP loan and wish to seek a second loan. Borrowers applying for a second loan must have fewer than 300 employees and have gross receipts during any quarter in 2020 that reflect at least a 25% reduction from the gross receipts of the company during the same quarter in 2019.

Boards should keep in mind that, while the new SBA applications are not yet published, we expect that all borrowers will still need to certify that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Boards should consider whether they can make that certification in good faith. For example, if a building has a commercial tenant that is in arrears or if the Board has agreed to substantial rent deferrals, abatements or reductions, the Board may be able to make the certification, but Boards that have not experienced any unusually high collection losses may not.

As a reminder, before submitting a loan application, cooperative and condominium governing documents should be reviewed to determine whether there are any restrictions on the Board’s authority to borrow money and, therefore, to seek a PPP loan. Every cooperative that presently has a mortgage or other loan outstanding must also review its existing loan documentation to determine whether the consent of their current lender will be required.

Armstrong Teasdale attorneys are actively monitoring and providing updates regarding the impact of COVID-19, including the PPP and other provisions of the CARES Act. Should the SBA provide additional guidance, we will be sure to update you. 

Contact Us
  • Worldwide
  • Boston, MA
  • Chicago, IL
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Orange County, CA
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Chicago, IL
100 North Riverside Plaza
Suite 1500
Chicago, IL 60606-1520
Google Maps
Chicago, Illinois
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
7160 Rafael Rivera Way
Suite 320
Las Vegas, NV 89113
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1200
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Orange County, CA
19800 MacArthur Boulevard
Suite 300
Irvine, CA 92612
Google Maps
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
222 South Main St.
Suite 1830
Salt Lake City, UT 84101
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1717 Pennsylvania Avenue NW
Suite 400
Washington, DC 20006
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware