PPP Loans Update: Most Ag Businesses Can Apply

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As part of the CARES Act stimulus package, Congress established the Paycheck Protection Program (PPP) to provide forgivable loans to small businesses, non-profits, sole proprietors and self-employed individuals. Congress added this program onto the existing Small Business Administration 7(a) loan program.

This created some measure of confusion for agricultural businesses most of whom have traditionally exceeded annual receipts thresholds for the 7(a) program.

K·Coe Isom felt strongly that agricultural businesses with 500 employees or less should be able to receive PPP loans and loan forgiveness since Congress did not require businesses to meet the SBA annual receipts thresholds.

Late last week, the SBA released an Interim Final Rule (IFR) to implement the PPP program. While the rule was drafted poorly, a close reading of the rule reveals that SBA is not requiring agricultural producers to meet annual receipts limitations. That means that agriculture enterprises that employ 500 or less people (whose principal place of residence is in the United States) are eligible for PPP loans and PPP loan forgiveness, regardless of revenue levels.

“This has been the number one question and concern for ag producers, ‘Can I qualify?’, and it has been a point of frustration and contention for the ag industry,” said Brian Kuehl, Director of Government and Public Affairs for K·Coe Isom. “We’re pleased that the SBA followed the intent of Congress and extended the opportunity for Paycheck Protection Program loans and loan forgiveness to many agricultural producers.”

Clarifications

On April 2, 2020, the Small Business Administration released its interim final rule (under the CARES Act) stating that agricultural businesses DO NOT need to be classified as “small businesses” under the Small Business Act in order to participate in the Paycheck Protection Program.

As long as the agricultural business has no more than 500 employees, they are eligible for funding under the Paycheck Protection Program and do not need to meet SBA annual receipts thresholds.

Applications

Applications begin on:

  • April 3 for small businesses and sole proprietorships through existing SBA 7(a) lenders
  • April 10 for independent contractors and self-employed individuals through existing SBA 7(a) lenders Agricultural businesses that qualify may apply beginning on April 3, 2020.

For more resources on PPP loans:

PPP Update: Considerations when Applying

CARES Act FAQs: Helpful Loan Guidance for Businesses

American Farm Bureau Federation post:  https://www.fb.org/market-intel/update-ag-and-pppl

Contact a K·Coe Isom advisor for questions or guidance.

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Brian Kuehl

Brian Kuehl

Government and Public Affairs Director