April 22, 2020
Note: This post has been updated since its original publication and is current as of April 28. We will continue to update this post as more information becomes available.
As farmers and communities across the country continue to face health, safety, and business impacts as a result of the ongoing COVID-19 crisis, many grassroots organizations serving farmers are mobilizing to connect producers to information and relief opportunities. This post examines some particularly helpful farmer resources published recently by two leading entities in food and farm law. While the sections below offer an overview of these resources, we encourage readers to refer to the original publications for more detailed information. We will update this page as new information and editions become available.
Last week, Farmers’ Legal Action Group (FLAG) — a nonprofit law center that provides legal services to family farmers — published a comprehensive Farmers’ Guide to COVID-19 Relief. The guide provides information on programs and provisions within the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other emerging policies as they relate to agricultural producers. Along with an overview of financial assistance for farmers, the Guide also includes important guidance about avoiding scams and mitigating discrimination in aid. For a higher level glance at COVID-19 resources, see FLAG’s summary of COVID-19 relief for farmers published May 4: Navigating COVID-19 Relief for Farmers.
FLAG led the development and drafting of both of the above resources with support and input from Farm Aid, the Rural Advancement Foundation International – USA, the Intertribal Agriculture Council, the Indigenous Food and Agriculture Initiative and the National Sustainable Agriculture Coalition.
The Food and Beverage Law Clinic at the Elisabeth Haub School of Law at Pace University (Pace-NRDC Food Law Initiative) also recently published a Chart of COVID-19 Federal Legislation and Federal Agency Relief Helpful to Farmers, prepared by Shearman & Sterling LLP (English, Spanish), as well as an FAQ on Funding Programs Available to Small and Mid-Size Farms in Response to COVID-19 (English, Spanish). The FAQ is particularly helpful for prospective applicants to Small Business Administration (SBA) loan programs including the Economic Injury Disaster Loans (EIDL) for which farmers are now eligible as of April 24, 2020.
NSAC took a closer look at both of these resources and highlight several pieces that may be most helpful to farmers during the evolving pandemic:
As we’ve previously reported, the specific agricultural provisions for farmer disaster relief within the CARES Act include:
USDA recently announced the Coronavirus Food Assistance Program (CFAP), which outlines how some of this money will be distributed but the initial notification lacks detail. NSAC is currently working to provide input to USDA to ensure the CFAP program is accessible, equitable, and prioritizes farmers who need aid the most. For more information on these provisions and NSAC’s efforts on implementation, take a look at our blog on the Senate pandemic aid package.
Also known as Economic Impact Payments, Recovery Rebates are income-based allowances permitting households to receive $1,200 per eligible person. Farmers are eligible for these rebates. For more information, please visit the IRS webpage on Economic Impact Payments.
SBA Programs: PPP and EIDL
The CARES Act authorizes two new SBA loan programs – the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Emergency Grants – in order to provide urgent relief for small businesses.
Important Note: PPP loans and EIDLs are issued on a first-come first-serve basis. As of April 16, SBA exhausted all funding provided by the CARES Act for PPP loans and EIDL and halted acceptance of new PPP or EIDL applications. However, as of April 24, 2020, Congress has appropriated additional funding for PPP and EIDL and is expected to resume accepting new applications in late April. As of May 4, SBA has reopened the EIDL program and is accepting applications from agricultural businesses only.
PPP provides forgivable loans of up to $10 million to help businesses (including farm businesses) rehire or retain workers during the COVID-19 crisis. All businesses with fewer than 500 employees are eligible to obtain a PPP loan. Businesses include sole proprietorships, independent contractors and self-employed persons, private non-profit organizations, tribal organizations, or 501(c)(19) veterans organizations affected by COVID-19. PPP loans can be used to cover payroll costs, mortgage interest, rent, and utility costs over the eight-week period after the loan is made.
The COVID-19 EIDL program can provide up to $2 million in loans to small businesses and nonprofits and permits eligible applicants to receive an advance on that loan of up to $10,000 that the business will not need to repay. The loan and emergency advance can be used to cover fixed debts, payroll, accounts payable, and other bills that a business cannot pay because of the ongoing COVID-19 crisis. As of April 24, 2020, farmers are eligible for EIDL funding.
NOTE: As of May 4, SBA has reopened the EIDL program and is only accepting applications from agricultural businesses who are newly eligible for funding. For agricultural businesses that submitted an EIDL application prior to April 15, SBA will process these applications without a need to reapply.
Unemployment Insurance and Farmers
The CARES Act makes the following changes to unemployment insurance benefits which may be helpful to farmers:
Foreclosure Moratorium and Consumer Right to Request Forbearance
The CARES Act includes two protections for borrowers with residential loans:
As of now, these protections do not appear to be available for most farm mortgages, even if there is a home on the land that is mortgaged. If a farm has a mortgage that only covers a residence and not a large part of the farmland, that mortgage could be eligible for the CARES Act mortgage forbearance and foreclosure moratorium. See the FLAG guide for more details.
CARES Act and Bankruptcy Provisions
The CARES Act changes some of the statutes that govern bankruptcy. For most farmers considering bankruptcy, the CARES Act changes will not have an impact on the usefulness of bankruptcy. Read more about these changes and how they may affect farm businesses in the FLAG guide.
The Farm Service Agency (FSA) recently announced several changes in administrative actions that affect FSA availability and suggest some flexibility in servicing direct and guaranteed loans. For additional details on changes to loan program processing and FSA availability during COVID-19, please refer to the FLAG Guide or and/or NSAC’s recent blog on farm loan and crop insurance changes.
Given that insured crop losses are typically those due to unavoidable natural causes such as drought, insects, plant disease, and natural disasters, COVID-19 does not create an insurable loss, and therefore is not covered by crop insurance. Even if a farmer has crop insurance covering a crop that no longer has a market due to COVID-19 (e.g. a crop that was to be sold at a farmers market that is now closed, or sold to an institution that is no longer in operation) they cannot simply shift to a different crop and expect the crop insurance policy to cover the new crop. Any changes must be discussed with and approved by the crop insurance provider. The FLAG guide stresses the importance of getting any agreements on policy changes in writing.
RMA Changes to Crop Insurance in Light of COVID-19
In response to COVID-19, the Risk Management Agency (RMA) has made several changes that provide policy flexibilities to producers with crop insurance. For more specifics on RMA changes to crop insurance, please read NSAC’s blog on farm loans and crop insurance changes or refer to the FLAG guide.
NAP Coverage and COVID-19
The Noninsured Crop Disaster Assistance Program (NAP) provides crop loss assistance to farmers who are unable to obtain federal crop insurance for a particular crop. USDA has not yet released any information regarding how losses related to COVID-19 will be handled under NAP. Similar to crop insurance, insurable losses for NAP are generally limited to natural disaster causes, meaning COVID-19 likely does not create an insurable loss under NAP. The FLAG guide urges any farmer who purchased NAP coverage to be extremely careful before making changes to their farming operation, and to first contact FSA.
The FLAG guide highlights efforts being made by state, local, and tribal governments to provide relief in response to COVID-19, particularly when it comes to the rights of farmers facing financial difficulty. Many states are placing limits on debt collection activities and prohibiting foreclosure sales and evictions for residential and commercial properties. Many local courts are responding by ordering delays and restricting in-person proceedings. For more information on state, local, and tribal relief efforts and court responses, please defer to the FLAG guide.
Unfortunately, even amidst a crisis like COVID-19, there are a number of fraudulent charities and solicitations taking advantage of those seeking aid.
State attorneys general are responsible for enforcing consumer protection laws that prohibit scams. The National Association of Attorneys General provides information on potential scams during this time of COVID-19, and also provides links to the website for each state’s Attorney General. The Small Business Administration (SBA) and the Federal Trade Commission (FTC) are also warning people about a number of COVID-19 scams.
In addition to being wary of scams, FLAG emphasizes that discrimination is illegal according to numerous laws, and FLAG can offer information and advice to farmers about their rights and provide solutions if they believe they have been discriminated against.
In USDA programs, discrimination is prohibited on the bases of race, color, religion, sex, age, national origin, marital status, sexual orientation, familial status, disability, limited English proficiency, or because all or a part of an individual’s income is derived from a public assistance program.
If anyone believes they experienced discrimination when obtaining services from USDA, participating in a USDA program, or a program that receives financial assistance from USDA, they should file a complaint with USDA. The Office of the Assistant Secretary for Civil Rights (OASCR), through the Center for Civil Rights Enforcement, will investigate and resolve complaints of discrimination in programs operated or assisted by USDA. FLAG also offers a resource on The USDA Discrimination Complaint Process, which provides a step-by-step guide on filing a claim as well as steps for further action.