It was not that long ago when we talked about markets and selling grains, now the focus has been turned to programs. The PPP administered through local banks and funded by SBA has some holes in it for farmers. The first one is that it is based off of payroll and a lot of farmers do not pay themselves a regular check, and the second is H2A workers were left out of payroll which affects farmers as well.
I believe the first issue has been resolved (see below) but the second is still making its way through the rules committee. Senator Hoeven’s office is currently working on the inclusion of H2A employees and rural electric cooperatives. Senator Hoeven sits on the Ag committee as well as appropriations and carries a large stick so we anticipate that this will be included in the coming weeks.
Currently, all the funding for this program is accounted for which means if you have applied and do not have an assigned SBA loan number I’m guessing your application will not be approved at this time. If you have not applied and wish to do so, please contact your local bank for instructions. I do not know if they will take them and put them into a queue until more funding gets authorized, or simply ask you to wait. If you have applied and did not get funded and did not include yourself (which you can do now), I would revise the application and be the first to apply when reauthorized.
For sole proprietors, they will use net profit amount as their payroll. This number can typically be found on IRS Form 1040, Schedule C, line 31, or for most farmers on schedule F, line 34.
That amount (still limited to $100,000 per individual, like the payroll provision) will be divided by 12 and then multiplied by 2.5 to get the maximum loan eligibility.
If you are a partner in a partnership without employees (also common for a lot of farms), you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.
The forgiveness requirements will remain similar to existing rules with eligible amounts for forgiveness including:
- Owner compensation replacement, calculated based on 2019 net profit, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit.
- Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020.
- Rent payments on lease agreements in force before February 15, 2020.
Utility payments under service agreements dated before February 15, 2020
There are still questions on PPP we are working on (inclusion of H2A employees, rural electric cooperatives, etc.) but we hope this update on no employee businesses is helpful to you today.
I just got off the phone with Hoeven’s office to get an update on payment administering. As of today, I do not know of any North Dakota farmers that have received a payment other than sugar beets. I am told that it is due to the quality provisions that were added late and that the USDA is working on the language. They understand that the local offices are a cluster and inundated with programs at the moment and are looking for county wide payment options. Vague, I know but hope to have more information soon!
The new funding for CCC is being allocated out as we speak with dairy, livestock, and fresh growers first in line for this funding. This announcement should be out shortly as well. We are advocating for $150 per head on the livestock.
As always if you have any questions please call the office.