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The CARES Act passed by Congress recently includes the Paycheck Protection Program that enables businesses to continue paying employees. The Department of Treasury and Small Business Administration (SBA) released an interim final rule on the Paycheck Protection Program (PPP).
Small businesses are described as having fewer than 500 employees, and the goal of the CARES Act is to keep them employed. Funds in the act also help with business expenses such as payroll, rent, and utilities.
Farms and agribusinesses are eligible for Paycheck Protection Program (PPP) loans as long as they have fewer than 500 employees and meet the definition of a “small business.” Financial institutions, including the Farm Credit system, will be responsible for processing loan applications and administering the loan. Loans are subject to SBA’s affiliation rules.
Agricultural producers are eligible to participate in the program and should reach out to their bankers and/or agricultural lenders to apply immediately. There are some administrative details SBA needs to confirm but be aware that the loans will be provided on a first-come, first-served basis.
The website also allows you to find a lender close to you. Small businesses, sole proprietorships, independent contractors, self-employed persons, private nonprofit organizations, and veterans organizations affected are eligible to apply.
This SBA website includes loan information, who can apply, loan details on forgiveness, other assistance; and lender forms and guidance.
Loans have an interest rate of 1% and a mature in two years with loan payments being deferred for the first six months. Loan amounts are calculated based on the payroll costs for all employees whose “principal place of residence” is in the U.S. Loans will be fully forgiven if at least 75% of the funds are used for payroll costs, and the remainder is used for interest on mortgages, rent, and utilities. Loan forgiveness is also based on the employer maintaining or quickly rehiring employees at the same salary level.
The PPP will be available through June 30, 2020. For questions on the PPP contact Lender Relations at your local SBA Field Office at https://www.sba.gov/tools/local-assistance/districtoffices.