Farmers may be able to get help covering business costs through the coronavirus aid program recently approved by Congress and the president — but they need to act quickly, an LSU AgCenter economist said.
The Coronavirus Aid, Relief and Economic Security, or CARES, Act aims to soften the blow the coronavirus pandemic has dealt to the nation’s economy. Among other stimulus measures, the act calls for many Americans to receive payments of $1,200 and provides for a Paycheck Protection Program designed to help small businesses pay for short-term operating expenses and retain employees.
“Agriculture is in a unique situation in these trying times, as the industry has been deemed essential and vital to the country’s security,” said AgCenter economist Michael Deliberto.
“The provisions of the CARES Act are primarily aimed at assisting business that have had their daily operations interrupted by the spread of COVID-19. However, even as operations continue on many of the country’s farms and ranches, some of the provisions in the CARES Act are applicable to agriculture.”
The Paycheck Protection Program, or PPP, is being administered through the Small Business Administration. Owners of businesses with 500 or fewer employees can apply for loans that are 2.5 times the amount of their average monthly payroll.
Information on applying for the loans can be found online at www.sba.gov.
“There has been some question as to whether agricultural businesses qualify for this program,” Deliberto said. “On the surface, agricultural producers and businesses appear to qualify for this loan.”
People won’t have to pay back the portions of the SBA loans they spend on payroll, utility payments and certain other expenses.
But farmers should be aware of some exceptions, Deliberto said.
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“Under the current interpretation, payroll expenses cannot include salaries for foreign workers in the H-2A and H-2B programs or independent farm labor contractors referred to as 1099 workers,” he said. “Farmers should not include 1099 payments when calculating their average monthly payroll for the purposes of acquiring a loan.”
He added that the American Farm Bureau Federation is trying to persuade officials to make H-2A and H-2B compensation eligible for these programs.
Deliberto encouraged farmers to apply for the loans as soon as possible.
“Given that there is a limited amount of federal funds — $350 billion — for the PPP that will have to potentially satisfy the more than 3 million small business in the U.S., competition for these funds will be onerous,” he said. “Agricultural producers are urged to contact their lenders and apply via the SBA website. Time may be running out to apply.”