Farmer Eligibility for SBA COVID-19 Relief Programs

Update: EIDL Applications Open for Agricultural Businesses – May 4, 2020

Today, the Small Business Administration (SBA) opened the Economic Injury Disaster Loan (EIDL) program specifically for agricultural businesses. According to SBA, “Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis. For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying.”

RAFI-USA recommends that farmers and ranchers in need of this program apply as soon as possible, since demand on the funds appropriated for the program will be high.

Read SBA’s announcement, check out Farm Common’s webinar on EIDL, and apply!

Update on Relief Programs Available to Farmers – April 23, 2020

Earlier this week, the Senate passed another round of stimulus relief to address the needs of small businesses and replenish funding for programs created by the CARES Act. This most recent stimulus funding package expanded past programs and made farmers eligible for the Economic Injury Disaster Loan (EIDL) assistance program. Below are some brief updates farmers should know about and links to more information.

  • Tuesday’s Senate bill authorized additional funding for both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) assistance program.
    • The Senate bill also made the important change that farmers are now eligible for the EIDL program. EIDL applications go directly to the SBA. Because EIDL is newly available to farmers, it’s unclear at this time how the application process will go. SBA may require an applicant’s 2019 business tax return or 2019 profit and loss statement in order to apply, so we recommend preparing these documents and applying as soon as possible.  Find out more about farmers and EIDL from Farm Commons on April 27 or April 29!
    • Of the additional $321 billion in funding for PPP, $60 billion will be reserved for small businesses lacking access to large financial institutions. While the bill still needs to pass the House and be signed into law by the President, the funding is likely to be used up quickly, and farmers should contact lenders now (even if they don’t currently work with a specific lender) for guidance on how to apply for PPP. Check out Farm Commons webinar on how to apply for PPP!
  • The CARES Act also created the Pandemic Unemployment Assistance (PUA) program which provides financial relief for those whose work was impacted by the COVID-19 outbreak, but are ineligible for standard unemployment insurance. Farmers are eligible for PUA payments, provided they meet certain criteria. PUA is administered by individual states’ unemployment insurance programs, so farmers are encouraged to consult their local state agency for state-specific details. This webinar from Farm Commons has a helpful walk-through of PUA too!

Original Post – April 6, 2020

Since the passage of the CARES Act at the end of March there have been many questions as to how this relates to farmers. This week many farm groups, RAFI-USA included, have made a push to specifically include farmers in two Small Business Administration (SBA) response programs, the Payroll Protection Plan (PPP) and the Economic Injury Disaster Loan program (EIDL).

Yesterday, SBA issued an interim final rule on the CARES Act that included both the PPP and EIDL. Farmers appear to be eligible for PPP. According to the CEO of Farm Credit Council, Todd Van Hoose, “there is no question farms are eligible [for PPP]”.

However, there appears to be some conditions to that eligibility. Farms must have less than 500 employees and less than $1 million in annual revenues. Also, SBA is encouraging farms and agricultural businesses to first explore FSA loan programs, especially if those businesses already have established relationships with FSA. Also, it seems that PPP funds may not be used to cover costs of foreign labor or independent contractors and that farmers may need to evidence compensation to themselves.

However, farmers may have difficulty in finding a lender who is taking applications from farmers without prior lending relationships. If you are a farmer and would like to share your experience looking for a lender for PPP, you can contact [email protected].

Most agricultural businesses have not historically been eligible for EIDL (under the assumption that disaster programs from USDA would provide coverage), and as recently as April 2, the SBA clarified that they are not eligible.  However, an April 3rd letter from Senator Rubio and Representatives Velasquez and Chabot to the SBA clarifies that the Congressional intent of the CARES Act was to expand EIDL eligibility to farms and agricultural businesses, due to the fact that no agricultural disaster declaration has been triggered.  RAFI-USA will continue to monitor the situation.

These conditions create many questions and much uncertainty. RAFI-USA strives to provide the most accurate information in a timely fashion. To that end, we are having regular conversations with our local lenders, FSA officials, and SBA officials to ensure we are providing the best information on how these programs are being implemented.

We encourage you to refer to SBA’s recently released PPP information sheet for borrowers and SBA’s website with general information on the PPP, as well as the National Sustainable Agriculture Coalition’s most recent blog post on these issues.

In the meantime, we will continue to monitor the implementation of these programs in order to provide the most accurate information and guidance in this current disaster. 

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