Farmers eligible to apply for federal Paycheck Protection Program

The Small Business Association released the Paycheck Protection Program interim final rule on Friday, confirming that agriculture enterprises that employ 500 or less people whose principal place of residence is in the United States are eligible, regardless of revenue levels.

“As Governor Tony Evers has identified, agriculture is absolutely essential to our state’s economy,” said DATCP Interim Secretary Randy Romanski. “There are many resources available to help support our farmers during this difficult time. Farmers who think they may be eligible should be aware of this opportunity and reach out to their lenders if they are interested.”

The PPP provides small businesses with loans to pay up to eight weeks of payroll costs, including benefits. The funding can also be used to pay interest on mortgages, rent, and utilities. Loans will be provided on a first-come, first-served basis. Agricultural producers are eligible and can get started on the application now.

The PPP will provide to eligible businesses loans of up to $10 million to cover 2.5 times the average monthly payroll costs, measured over the 12 months preceding the loan origination date, plus an additional 25% for non-payroll costs. Payroll costs include salaries, commissions and tips; employee benefits (including health insurance premiums and retirement benefits); state and local taxes; and compensation to sole proprietors or independent contractors.

Non-payroll costs include interest on mortgage obligations incurred before Feb. 15, 2020, rent under lease agreements in force before Feb. 15, 2020, and utilities for which service began before Feb. 15, 2020.

The real highlight of the PPP however, is that the portion of the loan that covers eligible expenses within an eight-week period from Feb. 15, 2020 – June 30, 2020, is forgivable, as long as the company maintains staff and payroll. Any loan proceeds in excess of this amount are subject to repayment at a rate of 1%. The maximum duration of the PPP loans is two years.

In addition to the question about industry-specific revenue thresholds, the IFR does seem to confirm that wages paid to H-2A workers do not count toward a farm’s payroll cost. The IFR also confirmed that independent contractors neither count toward payroll costs, nor toward the number of the business’s employees. The logic here is that independent contractors are eligible to apply for their own PPP loan.

How to Apply

Funds from this program will be allocated to small businesses on a first-come, first-served basis. We recommend reaching out to an approved lender as soon as possible. The sample application, found here, can help potential borrowers prepare for the lender meeting.

Farmers can apply for the PPP through any existing SBA 7(a) lenders or through any federally insured depository institution, federally insured credit union or Farm Credit System institution that is participating. Current eligible lenders can be found by searching the SBA website here.

Applications can begin on:

* April 3 for small businesses and sole proprietorships through existing SBA 7(a) lenders

* April 10 for independent contractors and self-employed individuals through existing SBA 7(a) lenders

All federally insured depository institutions, federally insured credit unions and Farm Credit System institutions that are not existing SBA lenders can begin making loans once they are approved and enrolled in the SBA program. New lenders will need to submit their application to DelegatedAuthority@sba.gov to apply with the SBA.

“Farmers aren’t just farmers - they’re employers and entrepreneurs, too,” added WEDC Secretary and CEO Missy Hughes. “Many of our state’s rural communities depend on the economic activity generated by agricultural production. As they’re presented with challenges related to COVID-19, we want to make sure they know about the economic resources that are available to them.”

For a top-line overview of the PPP program CLICK HERE

Information for prospective borrowers can be found HERE

The application for borrowers can be found HERE

For questions on the Paycheck Protection Program, applicants should contact the Lender Relations Specialist in their local SBA Field Office. The local SBA Field Office can be found at https://www.sba.gov/tools/local-assistance/districtoffices.