There were some big events last week with government funding now available due to COVID-19 and the economic lockdown.
USDA came out with their COVID assistance program and opened the application process. In addition to USDA’s program, the House of Representatives passed a bill with changes to the Payroll Protection Program – administered by the Small Business Administration – that look to be beneficial for small business. The changes still need to be passed by the Senate and approved into law so it is by no means final, but it is a good sign.
Here is a quick summary of some of the new information and links to the government websites.
- COVID Food Assistance Program: (https://www.farmers.gov/cfap)
- Application through USDA / Farm Services Agency
- Based on sales and inventory in first two quarters of 2020. Funding to be provided:
- $9.5 billion for losses from price declines between 1/15/20-4/15/20
- $6.5 billion for market disruptions from the pandemic
- Received in two payments; first payment is 80%
- Payment limits
- $250,000 per individual up to three individuals
- Payroll Protection Program (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program)
- Application through bank
- Increased period from eight weeks to 24 weeks
- Decreased payroll floor from 75% to 60%
- This means that you can use up to 40% of the funds for expenses related to utilities and other specified non-payroll items
Know your options
It’s been a couple of rough years for farming so it’s important to know your options this season.
An important take away on the changes to PPP is that these programs are not set-in-stone when they first come out; make sure you’re keeping up on the programs even after you receive the funds.
You will want to read up on these programs and talk to professionals that are “in-the-know.” I would recommend talking to your FSA and loan officers about what the documentation to submit with the loan application, to provide during the allowable period, and to maintain after the period is over even before you fill out the application.
Work with your accountant on organizing and reconciling the information before the end of the period so you can keep everything nice and clean just in case you need to provide additional information down the road.