The Paycheck Protection Program (PPP) is a federal loan program to help businesses struggling with payroll due to COVID-19. HDFC co-ops are now eligible! The loan can be used to cover the payroll for your super or other full-time building staff.
What is the PPP?
PPP, or the Paycheck Protection Program, is a government program to help businesses negatively impacted by the COVID-19 pandemic. The purpose is to provide businesses with funds. At least 60% of the loan must go towards payroll expenses, and 40% can go to cover other eligible expenses, such as utility, mortgage, interest etc. HDFC’s can and are encouraged to apply if they report any kind of salary or wages when they file their corporate taxes.
How much money is an HDFC eligible for?
The max loan amount is 250% of monthly payroll expenses.
What are the terms of the loan?
The PPP program is a forgivable loan. It converts to a grant if the HDFC offers proof of using the funds to cover the expenses for which they applied, employee and compensation levels are maintained, and at least 60 percent of the proceeds are spent on payroll costs. If the building does not seek or obtain loan forgiveness, then PPP loans have an interest rate of 1%. Loans issued after June 5, 2020 have a maturity of five years.
No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
How does the HDFC obtain loan forgiveness?
The HDFC has 8 to 24 weeks to utilize the loan, submit proof of expenses for which you applied (return, rent, mortgage payment, etc.), along with the forgiveness application after having spent all the funds. The application for forgiveness must be done with the same financial institution with which you applied the PPP. If the waiver is approved, the government will send the funds to the financial institution (not the business).
How do we apply?
HDFC’s must apply with an SBA approved financial institution. You can apply through your co-op’s bank. Both the National Cooperative Bank and The Lower East Side People’s Federal Credit Union are processing applications. If you’re interested in applying through the Lower East Side People’s Federal Credit Union, go here. If you’re interested in applying through the National Cooperative Bank, reach out to Edward Howe at Ehowe@ncb.com or 212-808-0880.
How does the HDFC calculate what 2.5x the average monthly payroll is?
When is the deadline for applying?
The deadline for applying is March 31st or whenever the funds run out.
What are the requirements?
The HDFC Must have filed 2019 or 2020 taxes (if you have already filed for 2020, you must use 2020 taxes)
The HDFC must report “salaries and wages” in their taxes (i.e. there needs to be something in line 13 of the corporations’ 11-20 corporate tax return).