A new tranche of federal funding was made available this week to two federal programs to support small businesses weathering the impacts of COVID-19. Below are a few important pieces of information for each program, as well as links to our full factsheets.
Economic Injury Disaster Loans and Grants
- All cooperative businesses are eligible
- Apply through SBA website at covid19relief.sba.gov
- Applicants can request an advance of up to $10,000 within the application—this advance does not need to be repaid
- No personal guarantee is required on loans up to $200,000
- In co-ops where no owner holds more than 20 percent of the business, applicants can include their name or the name of their cooperative in that section of the form. Then, include more detailed information on the cooperative’s ownership as an addendum.
- If questions regarding ownership arise when speaking with an SBA case manager, you can cite Section 1110 of the CARES Act, which defines all cooperatives with 500 or fewer employees as eligible borrowers.
Paycheck Protection Program
- Most cooperatives are eligible, including agriculture, purchasing, worker and consumer food co-ops. Co-ops organized as 501(c)(3)s are also eligible
- Apply through a private lending institution – including credit unions, farm credit, and CDFIs. A list of participating lenders (as of April 23) can be found here.
- In co-ops where no owner holds more than 20 percent of the business, applicants can include their name or the name of their cooperative in that section of the form. Then, include more detailed information on the cooperative’s ownership as an addendum.
- Borrowers can apply for forgiveness on PPP loans if the employer meets certain criteria like keeping employees on payroll and at least 75% of the funds being used toward payroll.
- Treasury Department guidelines cite cooperative as eligible entities here.
Prior to COVID-19, many cooperatives were ineligible for disaster assistance programs administered by the U.S. Small Business Administration. NCBA CLUSA has led a number of advocacy efforts to eliminate these barriers and ensure cooperatives have equal access to federal programs, including:
- A letter from NCBA CLUSA president and CEO Doug O’Brien urging Administration and Congressional leaders to ensure co-ops are eligible for any federal assistance programs.
- NCBA CLUSA led a coalition letter of co-op sector executives urging Congress to include cooperatives in programs created by the CARES Act.
- After reports that SBA was considering making co-ops ineligible for the Paycheck Protection Program, NCBA CLUSA led a coalition letter of co-op organizations urging co-ops to be eligible borrowers. The U.S. Departments of Agriculture and Treasury issued formal guidance stating that many co-ops were eligible.