Tax Monitor

Electric Cooperatives May Be Eligible For PPP Loans

May 15, 2020

By: Mark A. Mangano

Electric cooperatives that are tax exempt under 501(c)(12) of the Internal Revenue Code (Code) are considered business entities organized for profit and therefore eligible for loans under the Paycheck Protection Program (PPP) as long as other eligibility requirements are met.

The Treasury Department published its Eleventh interim final rule: “Business Loan Program Temporary Changes; Paycheck Protection Program-Eligibility of Certain Electric Cooperatives” (Eleventh IFR) on May 14, 2020. For purposes of the PPP, the Eleventh IFR narrowly expands the definition of a “business concern” under the Small Business Administration regulations to include electric cooperatives exempt from taxation under 501(c)(12).

Electric cooperatives covered by this definition must meet the other eligibility standards of the PPP. They may avail themselves of several potential size standards to meet the PPP eligibility requirements.

Read the Eleventh IFR here.