June 25, 2020
Editor’s Note: This is a guest post written by the Farmers’ Legal Action Group, and updated as of April 25, 2021. Find earlier reporting from FLAG on the Paycheck Protection Program (PPP) on their website, and find NSAC’s initial reporting on PPP on our blog.
The deadline for the Paycheck Protection Program, a COVID-19 relief program that can be useful to many farmers, has now been extended to May 31, 2021.
The Paycheck Protection Program (PPP) is a loan program run by the Small Business Administration (SBA). As of April 25, 2021, SBA has approved 10.3 million loans totaling $770 billion across all 50 states. Farmers who have not already applied may want to consider applying for PPP, in part because recent changes to the rules may make the program more appealing to farmers.
Under PPP, self-employed people, including farmers, can receive low-interest loans that may be forgiven. The loans are fully forgiven if the farmer spends at least 60 percent of the loan money on payroll costs (including wages and certain employee benefits) over the next 24 weeks. The remainder must be spent on rent, utilities, or mortgage interest payments in order to be fully forgiven. To the extent the PPP loan is not forgiven, the interest rate is 1 percent and the repayment period is five years. There are no collateral requirements. In other words, even if the PPP loan is not forgiven, the loan terms are more favorable than the terms of many farm loans.
One important barrier for farmers that previously were unable to use the PPP has been removed, as farmers can now use gross income, not net profit, as the basis for their loan. Farmers can also now receive two different PPP loans, what the program calls “first draw PPP loans” and “second draw PPP loans.
To read more about important changes to PPP for farmers, check out FLAG’s new guide: Farmers Guide to the 2021 Paycheck Protection Program.
In sum, for many farmers a PPP loan can be a good option, and the deadline to apply is May 31, 2021. Farmers must apply through an approved SBA lender.
A copy of the PPP application, as well as a list of eligible lenders making PPP loans, can be found here.
Looking for additional COVID-19 aid? Find additional resources and information on our COVID-19 resource page.
Categories: Carousel, Grants and Programs