Get in Line Early: Apply Now
by Karen Kahn
With business shut down across much of the country, Congress has passed three disaster relief bills to address the economic fallout from COVID-19. Among the provisions in the CARES Act, signed by the president on March 27, is $350 billion for the Paycheck Protection Program (PPP), to help prevent workers from losing their jobs and small businesses from going under. Small employers (up to 500 employees, including 501(c)3 nonprofits), including cooperatives, who maintain their payroll during the COVID-19 emergency may receive up to 8 weeks of cash flow assistance. If the employer maintains payroll, the portion of the loans used to cover payroll, interest on mortgage obligations, rents and utilities will be forgiven.
In another program, small businesses, small agriculture cooperatives, and nonprofits, are eligible for the Small Business Administration’s Economic Injury Disaster Loans (EIDL), which will provide loans for up to $2 million for economic losses. Cooperatives and ESOPS with fewer than 500 employees are eligible to cover losses occurring between January 31, 2020 to the end of the calendar year.
The SBA has made it easier for worker cooperatives to access both PPP and disaster loans, by waiving the personal guarantee.
The disaster loans have generous terms: 3.75 percent, with no loan payments for the first year, and up to 30 years for repayment. Processing time is 30 to 45 days.
Both the ICA Group and the U.S. Federation of Worker Cooperatives (USFWC) have set up resource pages to help navigate the various assistance programs available. Jason Wiener PC also has excellent explainers. USFWC recommends that businesses move quickly to apply to SBA to get into the pipeline. The volume of submissions has already crashed the EIDL website.
Karen Kahn is a communications consultant and the editor of Employee Ownership News.