Farmers can apply for forgivable PPP loans


By Patsy Nicosia

It’s a little-known fact that small farmers can apply for forgivable loans as part of federal COVID economic stimulus efforts.
And especially timely:
Thursday, Congress extended the deadline for the Paycheck Protection Program—which had been set to expire today, March 31—for two more months, through May 31.
“I’m not sure how many farmers were aware that they could even apply,” said Cobleskill dairy farmer John Radliff.
“It’s certainly something small farmers should look into…In the beginning we didn’t qualify and the process can be a little overwhelming.”
The PPP was part of the first $2.2 trillion Stimulus package passed in March 2020 at the start of COVID as a way to help small businesses keep their doors open and continue to pay employees.
The extension through May 31 drew bipartisan support; the new eligibility rules took effect in January.
The Small Business Administration administers the PPP program in partnership with local lenders.
Small farm businesses are eligible for the loans whether or not they have employees.
According to Cornell University’s South Central NY Dairy & Field Crops Team, any farm that hasn’t yet received a PPP loan is eligible to apply; the process is different for those who have received a first draw loan and are looking for a second draw loan.
It gets complicated, but most farms can request up to 2.5 times their monthly payroll amount.
For those without payroll expenses in 2019, the maximum PPP loan they can request is about $20,000.
Those with gross incomes of $100,000 or more in 2019 may be eligible for more.
First draw PPP loans can be used for payroll costs—including employee benefits and owner compensation.
They can also be used for mortgage interest, rent, utilities, and farm purchases.
The loans are forgivable if employee retention criteria are met.
Previously, farmers needed to include equipment depreciation when calculating whether they qualified for the loans; now it’s based on gross income.
“In the case of a self-employed farmer, the way you’re entitled to spend it is owner compensation,” said Kristine Tidgren, a professor at Iowa State University’s Center for Agricultural Law and Taxation.
“Meaning that you get to actually have that money as income for yourself, kind of like a paycheck for the self-employed.
For more information on the PPP loans, go to the SBA’s website, or contact your local lender.