FARFA and many small farm organizations have been urging Congress to remove the SBA’s block on farmers and agricultural businesses qualifying for emergency loans and grants. And Congress listened!
Thanks to the stimulus bill passed last Friday, farmers are now eligible for SBA’s Economic Injury Disaster Loans (EIDL). Although labeled a loan program, the EIDL is providing grants of up to $10,000 that do not need to be repaid.
Congress also added more funds for both the EIDL and the Paycheck Protection Program (PPP). But they are expected to run out fast again! So, act quickly to apply if you need help through either program.
Economic Injury Disaster Loan (EIDL)
EIDLs can cover a broad range of business-related expenses. An EIDL loan and emergency grant can be used to pay fixed debts, payroll, accounts payable and other bills that a business cannot pay because of the ongoing COVID-19 crisis.
Small businesses and non-profit organizations with fewer than 500 employees are generally eligible to obtain an EIDL.
In order to apply for and receive an EIDL, applicants must self-certify that they are eligible to receive a disaster assistance loan by completing the COVID-19 Economic Injury Disaster Loan Application.
As of Tuesday, April 28, at 10 am Eastern, the SBA’s website is NOT accepting new EIDL applications. But the agency said they will post about the re-opening of the applications – including those from agricultural enterprises – “as soon as possible.”
Note that the EIDL grant is up to$10,000. Prior to the new funding, SBA was basing the amount on the number of employees (i.e. a business with 2 employees could get a $2,000 grant, a business with 5 employees could get a $5,000 grant, and a business with 10 or more employees would get $10,000). Because of the high demand, we would assume that SBA will continue this approach with the new funding.
Paycheck Protection Program (PPP)
The latest stimulus bill also included more funds for the Paycheck Protection Program (PPP). For the PPP forgivable loan, you work with your bank. Some of the larger banks appear to be giving preference to their bigger commercial clients, so if you have a relationship with a local bank, that is probably your best option. Call them, right now, to find out if they are able to process PPP applications!
The Paycheck Protection Program allows small businesses to get a loan to cover their existing payroll. Businesses can apply for up to 2.5 times their average monthly payroll, up to $10 million. And if they have the same number of employees at the same pay rates as of eight weeks after the loan, whatever portion of the loan was applied to payroll will be forgiven (i.e. not have to be paid back). The loan can also cover mortgage interest, rent, and utilities – but the amount of the loan forgiveness will be reduced if more than 25% of the loan proceeds are used on such non-payroll expenses.
Businesses with fewer than 500 employees, as well as 501(c)(3) nonprofit organizations, can apply. Farms are eligible, but they might be required to meet the SBA’s revenue cap for farms, namely having less than $1 million in annual revenues. (Whether the revenue cap applies or not is still unclear.)
SBA requires that farms and agricultural businesses first explore Farm Service Agency (FSA) loan programs, particularly if the applicant has a prior or existing relationship with FSA. More information on FSA loans is available HERE.
PPP loans cannot be used to cover payroll for foreign workers on H-2 visas or independent contractors.
Remember: For the EIDL, you fill out the SBA’s form online at https://www.sba.gov/disaster-assistance/coronavirus-covid-19.
For the PPP, you submit your application and supporting documentation through a bank.