Here’s a helpful graphic that explains the difference between the two via Live Oak Bank.
The USFWC is closely tracking the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) provided through the Small Business Administration (SBA) in response to COVID-19. Our staff is monitoring both the regulations around these loan programs, as well as the status of PPP loans through private lenders with an eye on how cooperatives are treated.
Regulations and standard operating procedures continue to change quickly. Here’s a few important updates that all co-ops should know as you apply for these loans:
Personal guarantees are waived for both the EIDL and PPP
Your organization, for-profit or non-profit, is NOT required to provide a personal guarantee for these loans. For the EIDL, no collateral is required for loans up to $25,000.
Worker cooperatives ARE eligible for the PPP.
Applying for loans with approved SBA lenders right now can be challenging, due to a lack of knowledge about worker co-ops. The USFWC is available to support.
PPP is administered through private lenders that are enrolled in SBA’s Preferred Lending Partners Program and the Farm Credit System. You can find eligible lenders here: https://www.sba.gov/paycheckprotection/find.
Here’s a map of all SBA 7(a) lenders from Oscar Perry Abello of Next City
We recommend the following procedure for worker co-op applications for the PPP: write the name of the co-op in the ownership box and in the addendum explain that it is a cooperative business so that it can be approved by SBA.
Here’s a sample addendum we have created to include with uploaded materials in your application.
Resources for immigrant workers should be shared widely.
Here is an FAQ specific to immigrant business owners in English and Spanish. The USFWC partnered with Center for Family Life, Democracy at Work Institute. the ICA Group, NYC NOWC, New York Law School, Takeroot Justice, and Transactional Law Clinics of Harvard Law School to create this resource.
