Financial Resources for Farmers Related to COVID-19

plant growing from hand
This post contains resources agricultural businesses might find useful.  Please keep in mind that the CARES Act signed by President Trump gave many agencies 15 days to create rules and mechanisms to distribute resources.  As such, please keep checking back for updates.
 
We want to send our appreciation to the many agencies and organizations who keep us updated on new information, these partnerships are invaluable.  NH Farm Bureau, New England Farmers’ Union, Farmer Veteran Coalition, Small Business Development Agency, Farm Service Agency, U.S. Department of Agriculture, and the NH Department of Agriculture, Markets and Food are among those who are providing resources and information for these posts.

 

ASSISTANCE FOR INDIVIUALS AND FAMILIES

  • The CARES Act included direct payments to individuals and families. The following link takes you to an IRS page that answers questions and provides information about this effort: CLICK HERE.

ASSISTANCE FOR SMALL BUSINESSES 

Updated Paycheck Protection Program Information
The following information is our understanding of this program as of 4/7/2020.  The information changes regularly.  This program requires that you apply through an approved lender. We hope that the information below allows you to ask the appropriate questions of your lender and understand the opportunities and requirements of this program. 
In addition to information from the Small Business Administration, three recorded webinars may also help you:
 
  • Pennsylvania Association for Sustainable Agriculture
  • Farm Commons
  • Farm Credit East
 
Also visit the following website if you have additional questions
 
**All Agricultural enterprises that meet the size requirements are eligible to apply for this program**
 
The Paycheck Protection Program (PPP) is a new guaranteed loan program, which includes $349 billion, for small businesses to keep their employees on the payroll. Eligible businesses include nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees.
Loans are capped at $10 million.
Loans cover 2.5 times your average monthly payroll and can include:
    • Wages, salaries, tips, commissions
    • Paid leave
    • Health care benefits (employer portion)
    • Retirement payroll taxes (employer portion)
    • State and local taxes
    • Mortgage interest incurred before February 15, 2020
    • Rent, under lease agreements in force before February 15, 2020
    • Utilities, for which service began before February 15, 2020.
Calculating average monthly payroll
  • Tools exists, include PASA’s open source on-line spreadsheet.  Also ask your lender for assistance.
  • For purposes of calculating “Average Monthly Payroll,” most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee. 
  • For seasonal businesses, the Applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee
  • For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee
 
What to exclude when calculating eligible amount?
  • Total compensation above $100k to an individual employee
  • Compensation to H2A workers and those whose primary residence is outside of the U.S.
  • Wages for family or sick leave receiving Family First Coronavirus Response Act credits (cannot double-dip)
  • Federal payroll taxes (Ask you lender)
Loan Repayment Terms
  • No collateral
  • No fees
  • No personal guarantee
  • No prepayment penalty
  • Deferred payments (minimum 6 months, up to 12 months. First payment is accrued 6 months interest only)
  • 2-year term for repayment
  • 1% interest rate
The loan will be forgiven if: (more guidance to come)
  • Amounts must be spent on eligible expenses in the 8 weeks immediately after loan closing (work with lender to determine closing date)
  • At least 75% of loan proceeds must be spent on payroll cost listed above
  • Forgiveness will be reduced by
    • Reduction in FTEs or number of employees (ask your lender)
    • Reduction in salary to employees
After 8 weeks, if you are seeking loan forgiveness, re-engage your lender. The following documents/forms are required:
  • Payroll and expense reports for the appropriate time period (2019 for most), including the following:
    • Gross wages, salary, tips, commissions or similar compensation
    • Paid vacation, parental, family, medical or sick leave
    • Severance pay paid
    • Group health care expenses (paid by employer), including insurance premiums
    • Retirement benefits paid
    • Taxes based on payroll expense
    • Net earnings from self-employment
  • Details needed for adjustments to payroll
    • Compensation paid to individual employee in excess of an annual salary of $100k prorated for the covered period
    • Payments to employees whose principal place of residence is outside of the U.S. (H2A, H2B, J1, etc.)
    • Sick/family leave wages covered by Families First Coronavirus Response Act (if you have or intend to apply for tax credits)
Forms to collect
  • Form 940, 943 (2019 annual) or /and 941 (for all quarters of 2019)
  • Form W-3 for 2019
  • State Payroll tax returns
  • List of employees
    • Whose compensation exceeded $100k, and the amount
    • Whose permanent residence is outside the US, and the amount
  • Cost of health care premiums paid by the employer
  • K-1s for partners (or guaranteed payment amounts if 2019 return not yet filed)
  • Schedule C or F for sole proprietors (or Profit and Loss if not yet filed)
Farmers can apply for the PPP through any existing SBA 7(a) lenders or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
 
Applications can begin on:
April 3, 2020, for small businesses and sole proprietorships through existing SBA 7(a) lenders
April 10, 2020, for independent contractors and self-employed individuals through existing SBA 7(a) lenders (Ask lenders if you can apply jointly for W-2 employees and yourself as a self-employed individual.  You can only apply for one loan)
 
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.
 
Paycheck Protection Program
 
**All Agricultural enterprises that meet the size requirements are eligible to apply for this program**
 
The Paycheck Protection Program (PPP) is a new guaranteed loan program, which includes $349 billion, for small businesses to keep their employees on the payroll. Eligible businesses include nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees.
Loans are capped at $10 million but can include up to eight weeks of the business’s average monthly payroll costs from the last year plus an additional 25 percent for non-payroll costs. Borrowers can apply for 2.5 times monthly payroll.  Borrower must certify that payroll figures are reliable.  Seasonal and new businesses will use different calculations. The PPP will be available through June 30, 2020.
 
The loan will be forgiven if:
All employees are kept or quickly rehired, and compensation levels are maintained for eight weeks (payroll costs are capped at $100,000 on an annualized basis for each employee)
 
The funds are used for:
  • Payroll and benefits
  • Mortgage interest incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities, for which service began before February 15, 2020.
 
Borrowers will still owe money if:
  • The loan amount is used for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.
  • Due to likely high subscription, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs.
  • You will also owe money if you do not maintain your staff and payroll.
Farmers can apply for the PPP through any existing SBA 7(a) lenders or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
 
Applications can begin on:
April 3, 2020, for small businesses and sole proprietorships through existing SBA 7(a) lenders
April 10, 2020, 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.

  • The Paycheck Protection Program prioritizes those employed by small businesses by authorizing up to $349 billion toward job retention and other expenses.  Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.
  • For an overview of the program CLICK HERE
  • If you’re a lender, more information can be found HERE
  • If you’re a borrower, more information can be found HERE
  • The application for borrowers can be found HERE
  • Press Release: With $349 Billion in Emergency Small Business Capital Cleared, Treasury and SBA Begin Unprecedented Public-Private Mobilization Effort to Distribute Funds (HERE)
  • Press Release: Treasury Encourages Businesses Impacted by COVID-19 to Use Employee Retention Credit (HERE)
 
Treasury Delays Tax and Reporting Due Dates for Alcohol, Tobacco, Firearms and Ammunition Businesses Hit by COVID-19 (HERE)
  • The Treasury Department is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19.
 
USDA has just announced three ways to help farmers and ranchers during the COVID-19 crisis. Please check out these opportunities to help you with your operations if you are in need.
  • Conservation Reserve Program: More than 3.4 million acres selected for the general signup Conservation Reserve Program. Through CRP, farmers and ranchers receive an annual rental payment for establishing long-term, resource-conserving plant species, such as approved grasses or trees, to control soil erosion, improve water quality and enhance wildlife habitat on cropland. For more details on how to apply, click here.
  •  Farm Service Agency has made changes to farm loan, disaster, conservation and safety net programs to make it easier for customers to conduct business. This includes relaxing the farm loan-making process, servicing direct loans, and servicing guaranteed loans. Click here for more information.
  • Risk Management Agency: The Risk Management Agency is authorizing additional flexibilities due to coronavirus while continuing to support producers, working through Approved Insurance Providers (AIPs) to deliver services, including processing policies, claims and agreements. These flexibilities include: enabling producers to send notifications and reports electronically, extending the date for production reports and providing additional time and deferring interest on premium and other payments. Click here for more details.