Advocates Fought to Make Co-ops Eligible for Paycheck Protection Loans

This is a lightly edited version of an article that appeared on the website qns.com. Geoffrey Mazel is a partner in the law firm Hankin & Mazel and counsel to the Presidents Co-op & Condo Council.

On Dec. 27, 2020, President Donald Trump finally signed a coronavirus stimulus relief bill. This bill includes relief for a wide range of Americans, and it specifically makes cooperative housing corporations eligible for forgivable loans under the Payment Protection Program.

The inclusion of co-ops in this legislation was the result of a long, hard battle by a consortium of advocates, led by a Queens-based organization, the Presidents Co-op & Condo Council (PCCC). While this advocacy organization has vast experience on local issues with the New York City Council and New York State Legislature, it had to reach out to a national network of organizations to push for this legislation.

The Payroll Protection Program, part of the original CARES Act passed by the U.S. Congress in March 2020, provided forgivable loans to small businesses. Since the COVID-19 pandemic was raging at that time, this program provided a glimmer of financial relief to the suffering co-op community, especially in New York City, then the epicenter of the pandemic.

However, on April 2, 2020, the tens of thousands of co-op residents in our area and the 1.5 million co-op residents nationwide were devastated to learn that the Small Business Administration (SBA) issued an Interim Final Rule stating that the Payroll Protection Program excluded “passive entities,” which would include residential cooperative corporations. The PCCC took immediate action to right this tremendous injustice.

The PCCC spearheaded a national coalition of co-op advocates, including elected officials and sister co-op organizations, among them the Council of New York Cooperatives & Condominiums, the Association of Riverdale Cooperatives and Condominiums, National Cooperative Bank, the New York Association of Realty Managers, the U.S Federation of Worker Cooperatives, the Cooperative and Condominium Advisory Council of Westchester, the National Cooperative Business Association, the Real Estate Board of New York, and the National Association of Housing Cooperatives.

The feedback was immediate and effective. On April 22, 2020, City Council member Paul Vallone, a Queens Democrat, introduced a resolution calling on Congress and President Trump to expand the CARES Act and Payroll Protection Program to include residential cooperatives and condominiums.

In May 2020, as a result of the support of U.S. Reps. Grace Meng and Tom Suozzi, Queens Democrats, the House of Representatives passed the Heroes Act, which included explicit language that would qualify co-ops for PPP loans. Obviously, the biggest hurdle was yet to come – passing this legislation in the Republican-controlled Senate.

Thereafter, the PCCC worked closely with U.S. Sen. Charles Schumer’s office to ensure that any stimulus package would include co-ops. Schumer met with the PCCC personally and fought doggedly to make this happen. On Dec. 21, 2020, Schumer announced that co-ops would finally become eligible for forgivable PPP loans as part of the new $900 billion stimulus package hammered out by the House and Senate. 

The SBA is expected to issue loan guidelines sometime this month. It will then be possible for co-ops to determine if they meet all eligibility requirements. Time will tell the true effects of this legislation on the co-op community, but the passage of this legislation on the national stage is the result of the hard work and determination of grass roots Queens co-op owners who fought so diligently on this issue.