Cooperative businesses experiencing financial issues due to the COVID-19 pandemic are eligible to receive assistance through two major programs of the U.S. Small Business Administration, the Payroll Protection Program and the Economic Injury Disaster Loan program.
Payroll Protection Program
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Payroll Protection Program (PPP), providing $349 billion for small business loans for qualified payroll costs, rent, utilities, and interest on mortgages and other debt obligations. PPP loan amounts are forgivable as long as:
- Loan proceeds are used to cover payroll costs and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
- Employee and compensation levels are maintained.
The National Council of Farmer Cooperatives (NCFC) and National Cooperative Business Association (NCBA CLUSA) have shared that cooperative businesses in agriculture, purchasing, consumer food, and worker cooperatives that meet the size criteria, generally with fewer than 500 employees, are eligible for this program based on the interim rule and Department guidance.
Applicants can apply to the PPP through eligible Small Business Administration lenders beginning Friday, April 3, 2020. Applicants will be required to submit an application and payroll documentation. To find an eligible SBA lending institution, tap or click here.
For a factsheet about the PPP, including information about loan terms, interest rates, and repayment periods, tap or click here.
Economic Injury Disaster Loans
The Small Business Administration’s Economic Injury Disaster Loan (EIDL) program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing due to COVID-19.
In response to the COVID-19 pandemic, small businesses in all 50 states and Washington, D.C. are eligible to apply for an EIDL advance of up to $10,000 for businesses that are currently experiencing a temporary loss of revenue. This loan advance does not have to be repaid and will be made available within three days of a successful application, even if the loan is not approved or if it is approved and not taken.
Cooperative businesses with fewer than 500 employees are eligible for the EIDL program.
To learn more about the EIDL program, including information about interest rates, loan terms, use of loan funds, and the application process tap or click here. Applicants to the EIDL program can apply directly to the SBA.
To learn more about applying to the EIDL program as a cooperative business, watch this webinar, “Demystifying SBA’s Economic Injury Disaster Loans,” hosted by the National Cooperative Business Association (NCBA CLUSA).
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