We are living in extraordinary times. In January, many of us were looking at 2020 with optimism, believing that there is no way that this year could be worse than 2019.
Then the world was introduced to the coronavirus or COVID-19. By either name, it has become synonymous with economic destruction. During the last few months, COVID-19 has turned the world upside down and forced the U.S. Congress and President Donald Trump to pass a $2 trillion stimulus package.
To put that in prospective, the entire federal annual budget is $4 trillion. The discussion has already started about estimulus packages.
The biggest economic stimulus in American history, passed through Congress by Pres. Trump and legislative leaders, includes hundreds of billions of dollars for different sectors of the economy.
Agriculture was part of the package, including $349 billion in forgivable loans to small businesses to pay employees. Administered by the Small Business Administration, the Paycheck Protection Program is an existing loan program that had its requirement liberalized. The program is designed to provide small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans.
The main question with any federal program is how to determine if you are eligible. To make a final determination, a small business owner should work with his or her lending institution but generally any small business (a business with less than 500 employees) can apply for loans up to the lesser of 2.5 times the average monthly payroll costs or $10 million.
There has been some questions about whether farms with receipts greater than $1 million will be eligible and according to the House Small Business Committee, eligibility is determined by the size of the workforce. In this case, 500 employees.
The application process for small businesses opens on April 3 and the process for self-employed individuals opens on April 10. An individuals can start working with his or her lending institution right away though and most federally insured depository institutions or Small Business Administration lender are already approved.
For a list of approved Small Business Administration lenders, visit www.sba.gov.
The Paycheck Protection Program classifies these as a forgivable loan, which makes the loan essentially grants to the employer. The funds can be used for payroll, which includes benefits, state and local taxes on compensation, mortgage interest, rent and utility payments during the eight weeks after receiving the loan. At the end of the loan, money may be owed if the level of the payroll, the number of staff or rate of pay, is not maintained.
I encourage farmers to talk with their lending institution to see if they qualify. This is a first come, first serve program. When the money has been exhausted, the program will end.
While implementing regulations have not yet been published, the Small Business Administration is expecting regulations to be published soon. As additional details begin to emerge with the Paycheck Protection Program and as additional stimulus packages are negotiated, we will continue to advocate for Wisconsin’s agriculture industry.
For more information, please review the fact sheet and application form at https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf
Tyler Wenzlaff serves as Wisconsin Farm Bureau’s director of governmental relations focusing on national affairs.
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