PPP Update

Once they received information about certain government COVID-19 relief programs, some co-ops and condos were quick to apply for the support that was offered.  Others believed they were not qualified and so they did not apply.  As we have become increasingly aware, our legislatures often fail to recognize co-ops and condos, one way or another (think: FEMA after Hurricane Sandy or the recent Housing Stability and Protection Act, as examples).  And so we often find ourselves in grey areas where we are not specifically included and nor are we excluded from new regulation or support.

Recently we have heard of cases of attorneys and banks that say co-ops and condos, as employers, are not eligible for Washington’s COVID-19 financial relief.  We also know of at least one bank that is accepting and processing applications from co-ops under the provisions of the federal PPP / SBA provisions.  So, our best advice is to review the qualification details for each program and if your think you qualify, then push forward with the application process – you really have nothing to lose.   No doubt attorneys and courts will ultimately need to hash things out.

In the mean time, we are pleased to offer the following update.


The floodgates on the $349 billion SBA guaranteed, forgivable, loan program slammed shut last Thursday morning (April 16, 2020) when the SBA’s guarantee authorization ran out.

Congress may be about to increase the amount of loans that the SBA is permitted to guarantee, and the U. S. Treasury has already (on April 23, 2020) issued a new guidance which may be found here. Once the authorization is enacted, we anticipate that the SBA will be flooded with hundreds of thousands of loan guarantee requests almost immediately. (There may even be reason to fear that much of the funding may be diverted away from the “small” businesses for which it is nominally intended).  Therefore, we strongly urge those who are eligible for the loans but have not yet received complete approval to be prepared to submit their applications immediately.

There are many misunderstandings regarding the application process, which have quizzically led to people believing that they are much further along than they actually are. Some of the largest banks have accepted applications, but those applications are still being reviewed. Although some banks are sending out polite, “we’re sorry” emails, many banks do not tell applicants whether they are first in line or last in line. In many cases, the bank does not tell you whether it has even completed its own review of your application. If you are in this situation, you should contact your personal banker immediately to determine your status.

You should not accept vague platitudes instead of an honest answer from your bank. If you are unsatisfied with the response from your own banker, you may want to contact your attorney.  Your building’s attorney or perhaps your building manager may be able to help you find an alternate source of the funds if you have an application requesting a loan for only payroll costs that are strictly authorized by the rules (which means, among other things, no 1099 employees and no compensation over $100,000 per person).

Congress is also expected to increase the authorization for the Economic Injury Disaster Loan program, known as the EIDL. If that happens, the SBA should reopen its direct application portal, and you may want to apply for an EIDL loan if you qualify. The loan should be accompanied by a $10,000 EIDL grant that you are not required to repay even if your loan application is not granted. You can find more information from the SBA here.


As always, ARC is deeply appreciative of the professional advice we receive, and specifically recognize and thank Jay L. Hack, Esq. and Marc Luxemburg, Esq. of Gallet Dreyer & Berkey, LLP for the information in this report.

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