The Small Business Administration released rules Tuesday for a massive $349 billion forgivable loan program that is intended to help businesses, including agricultural employers, across the country to rehire or retain workers during the COVID-19 crisis.
Farms of all sizes should be eligible for the program as well as other agricultural businesses, said Paul Neiffer, an agricultural accounting specialist with CliftonLarsonAllen. “If you’re in business, you’re eligible," he said.
The American Farm Bureau Federation also believes that farms will be eligible, which is not true with previous SBA disaster lending, but there has been a last-minute effort to exclude agricultural producers from the new Paycheck Protection Program, said AFBF economist Veronica Nigh.
Under the program, businesses with fewer than 500 employees may qualify for a loan up to $10 million based on their eight weeks of prior average payroll, plus an additional 25% of that amount.
SBA will forgive the loan if 75% of the proceeds are used for payroll costs. Loan payments would not start for six months, and the interest rate will be 0.5%.
The sample application simply requires applicants to stipulate: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
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Companies in the hospitality and food industry with more than one location could also be eligible for the program if each site employs fewer than 500 workers, and each location would be eligible for the loans, SBA said.
The value of the loans may be rather limited for row crop farms that might have only a couple of employees. For other types of operations, including livestock producers and fruit and vegetable operations, it will be a significant benefit, Neiffer said.
He said that for every $100,000 in payroll a business has, including self employment income, a farm or other business would be eligible for about $21,000 in loan.
SBA Administrator Jovita Carranza said, “This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly."
Updated Wednesday morning with AFBF comment.
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