April 4, 2020

Revised Update: Cooperative & Condominium Eligibility for Paycheck Protection Program


Sorry to disturb your weekend, but we believe this Update requires it.

After sending our notice on Thursday recommending that most cooperatives and condominium associations would likely be eligible for loans under the Paycheck Protection Program (PPP), the SBA issued Interim Final Rules Thursday evening as well as a new sample Application Form. Based upon this new information, we are now recommending that cooperatives and condominium associations not apply for PPP loans until there is more clarity from the SBA or Congress. We understand that requests for such clarity are already being made.

The Interim Final Rules are set up in a Question and Answer format. Pursuant to answer 2.a.i.A, the SBA has stated that to be eligible for a PPP loan, an applicant must be:

small business concern as defined in section 3 of the Small Business Act (15 USC 632), and subject to SBA’s affiliation rules under 13 CFR 121.301(f) unless specifically waived in the Act. (emphasis added)

While the CARES Act itself clearly provides that “in addition to small business concerns, any business concern … shall be eligible …” (emphasis added), we must be respectful of the SBA’s rule-making authority until the confusion can be resolved.

The rules further point to the SBA’s Standard Operating Procedure (SOP) 50 10, Subpart B, Chapter 2 for its discussion of ineligible borrowers. The SOP includes (at page 105) that “[a]partment buildings and mobile home parks are not eligible.

Despite the potential argument that these new rules go too far and are contradictory to the CARES Act, which expressly seeks to expand eligibility beyond ordinary SBA restrictions, we cannot recommend that Boards file applications on the new Application Form. That form requires that the signor certify, among other things, that:

The Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (the Paycheck Protection Program Rule). (emphasis added)

Regardless of our view of the rule, as long as it remains in effect, we cannot advise that cooperative and condominium officers make the certification.  That said, we understand that many buildings may still, assuming an officer is prepared to make the certification (despite our advice to the contrary), file the application in case the rule changes.

We continue to monitor this shifting landscape and will provide further updates as additional information becomes available.


Jeffrey M. Schwartz – jschwartz@ssrga.com, 914-450-6280
Steven D. Sladkus – ssladkus@ssrga.com, 212-721-8900
Jeffrey S. Reich – jreich@ssrga.com, 917-864-0121