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Cover payroll, debt with Small Business Administration loansCover payroll, debt with Small Business Administration loans

Emergency COVID-19 programs have favorable terms that could be attractive for farm owners in need of help.

Chris Torres

April 2, 2020

3 Min Read
U.S. hundred dollar bills grow from the soil
GET FINANCIAL HELP: The Small Business Administration has several loan programs that could help cover payroll or any debt business owners may have accumulated as a result of the COVID-19 crisis.adventtr/Getty Images

The Small Business Administration has a couple of programs that could provide needed help to farmers for covering payroll or are in need of some debt relief.

Emergency loans

Small business owners in all 50 states can apply for an Economic Injury Disaster Loan advance of up to $10,000.

SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide economic support to small businesses to help overcome any temporary loss of revenue they are experiencing due to the outbreak of COVID-19. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

Small business owners can apply for a COVID-19 Economic Injury Disaster Loan online.

The Paycheck Protection Program is designed to help small businesses keep workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. The Paycheck Protection Program will be available through June 30.

This program is for any small business with less than 500 employees — including sole proprietorships, independent contractors and self-employed persons — private nonprofit organizations or 501(c)(19) veterans organizations affected by COVID-19. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.

Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.

Lenders can begin processing loan applications as soon as April 3, so it will be important to get an application in as soon as possible.

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities — at least 75% of the forgiven amount must have been used for payroll. Loan payments will also be deferred for six months.

No collateral or personal guarantees are required, and neither the government nor lenders will charge small businesses any fees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease.

The loan has a maturity of 2 years and an interest rate of .5%.

Download a sample application form to see the information that will be requested from you when applying for this loan.

Debt relief

The SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by COVID-19.

Under this program, SBA will pay the principal and interest of new 7(a) loans issued prior to Sept. 27 and will pay the principal and interest of current 7(a) loans for a period of six months.

The Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan.

If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.

Find an Express Bridge Loan lender by connecting with your local SBA District Office.

The American Farm Bureau Federation has a good outline on potential issues farmers could face filing an application, depending on their size and who they employ.

About the Author(s)

Chris Torres

Editor, American Agriculturist

Chris Torres, editor of American Agriculturist, previously worked at Lancaster Farming, where he started in 2006 as a staff writer and later became regional editor. Torres is a seven-time winner of the Keystone Press Awards, handed out by the Pennsylvania Press Association, and he is a Pennsylvania State University graduate.

Torres says he wants American Agriculturist to be farmers' "go-to product, continuing the legacy and high standard (former American Agriculturist editor) John Vogel has set." Torres succeeds Vogel, who retired after 47 years with Farm Progress and its related publications.

"The news business is a challenging job," Torres says. "It makes you think outside your small box, and you have to formulate what the reader wants to see from the overall product. It's rewarding to see a nice product in the end."

Torres' family is based in Lebanon County, Pa. His wife grew up on a small farm in Berks County, Pa., where they raised corn, soybeans, feeder cattle and more. Torres and his wife are parents to three young boys.

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