US co-ops eligible for Paycheck Protection Program

SBA interim rules indicate most co-operative business sectors will be able to access PPP loans

The US Small Business Administration published its interim guidelines, which clarify eligibility criteria for loans under the new paycheck protection programme (PPP) created by the CARES Act.

The interim rules indicate most co-operative business sectors will be able to access Paycheck Protection Program loans, including agriculture, purchasing, consumer food, and worker co-operatives.

Signed into law by President Trump on 27 March, the CARES Act is an emergency relief bill designed to address the impact of Covid-19 on the national economy. As part of the US$2.2tn (£1.78tn) economic stimulus package, the government provides US$349bn (£281bn) through the PPP to help businesses keep workers on their payroll.

“This is good news for many cooperatives and their employees,” Doug O’Brien, president and CEO of the National Co-operative Business Association (NCBA CLUSA), said in a statement. “The severe economic effects of this pandemic do not discriminate on the basis of business structure so neither should PPP. While we appreciate this recent guidance from SBA, we pledge to continue to work with the co-op community to make sure that all employees of co-ops are covered.”

Related: Covid-19: US co-ops ask Small Business Administration to clarify relief eligibility

The US Federation of Worker Co-operatives (USFWC) also welcomed the guidelines. “The fact that co-operatives are eligible for SBA support is a good signal from the Small Business Administration. Access to this relief is indicative of how economically devastating Covid-19 has been in such a short amount of time. Relief funding is welcome news for co-operative businesses and their workers,” Esteban Kelly, executive director of the USFWC, said in a press release.

He added: “Businesses like our worker-owned and governed member co-ops are an underserved sector of the small business community. We have fought for decades for co-op eligibility across the spectrum of SBA programs, are looking forward to continuing our work with the SBA to ensure that these guidelines inform long-term co-op eligibility for SBA programs. We are proud to be working with our national partners and mobilising members to ensure that co-operatives in the US receive the support they deserve.”

NCBA and USFWC continue to engage with SBA and legislators to ensure all co-ops are eligible for the programme. On 1 April NCBA joined by 16 other co-operative organisations, including USFWC, sent a letter to SBA asking it that co-operative businesses be allowed to participate in PPP.

Issued through private lending institutions, PPP loans are 100% guaranteed by SBA. If a borrower meets certain requirements, including maintaining payroll employees, much of the loan can be forgiven. The loans do not require a personal guarantee, a former requirement that prevented worker and consumer co-ops from accessing their SBA loan programs in the past.

Co-ops that are ineligible for a PPP loan can still qualify for an Economic Injury Disaster Loan, for which all co-operatives are eligible. Co-ops eligible for PPP loans can apply for the Economic Injury Disaster Loan as well.

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