MN Corn Growers Association
The Coronavirus Aid, Relief and Economic Security (CARES) Act provides relief to small businesses, including those in agriculture, through loans offered through the U.S. Small Business Administration (SBA).
While agriculture has historically been excluded from loans through SBA, the Paycheck Protection Program (PPP), authorized by the CARES Act, is available to farmers and co-ops under the current language, according to agriculture advocacy group Combest, Sell & Associates.
Eligible recipients can receive a PPP loan for up to two months of average payroll plus an additional 25 percent of that amount, capped at $10 million.
According to Combest, Sell & Associates, payroll costs will be calculated from the payroll costs incurred during the 2019 tax year. Seasonal employers would use the 12-week period beginning either February 15 or March 1 to determine an average monthly payroll cost.
Payroll costs include salaries, wages, commissions, or similar compensation; cash tips or equivalents; vacation, parental, family, medical, or sick leave; payment required for providing group health care benefits (including insurance premiums); payment of retirement benefits; and payroll taxes.
Loan payments will be deferred for six months, and the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities for the eight weeks following the date of loan origination. With anticipated high demand, SBA anticipates allowing no more than 25 percent of the forgiven amount be used for non-payroll costs.
Farmers and co-ops interested in a PPP loan can apply at an existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
Loans through PPP will start being accepted on April 3 for businesses and sole proprietors, and April 10 for independent contractors and self-employed individuals. The program will remain open through June 30, but all interested are encouraged to apply soon after their application period opens with limited funds available.
Additional information from SBA on the Payroll Protection Program is available here.
For farmer cooperatives up to 500 employees in size, the CARES Act also included Economic Injury Disaster Loan and Loans Advance. The program provides eligible small businesses with working capital loans of up to $2 million, with a loan advance up to $10,000. Helping businesses experiencing a temporary loss of revenue, funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
SBA released a guide to the CARES Act featuring helpful FAQs, which is available here.
Loan information from the Minnesota Department of Employment and Economic Development is available here.