COVID-19: Financial Relief
If My Business is Suffering, How Can I get Relief?
There is no question that COVID-19 has had devastating ramifications on various parts of the economy. Due to these effects, over the course of the past few months, the government has rolled out and enacted legislation to support businesses that have suffered. The federal government has established various lending programs and a direct payment program to provide financial relief. See below to find out where your business is eligible. Information is changing rapidly, please continue to refer to our resources as well as these helpful governments sites for the latest most up-to-date information.
Coronavirus Food Assistance Program (CFAP)
On April 17, 2020, USDA Secretary Sonny Perdue announced the Coronavirus Food Assistance Program. CFAP provides financial assistance through direct payments to growers and producers of agricultural commodities who have suffered a five-percent-or-greater price decline or who had losses due to market supply chain disruptions due to COVID-19 and face additional significant market costs. Among the eligible commodities are specialty crops. See below for more information.
- Eligible specialty crop commodities:
- Producers of specialty crops are eligible for CFAP payments in the following three categories:
- Had crops that suffered a five percent-or-greater price decline between mid-January and mid-April as a result of the COVID-19 pandemic,
- Had produce shipped but subsequently spoiled due to loss of marketing channel, and
- Had shipments that did not leave the farm or mature crops that remained unharvested.
- To see the full list of eligible specialty crops, click here.
- USDA announced on July 9, 2020, that more than 40 additional commodities would be made eligible for CFAP payments. In addition to these new commodities, USDA expanded the payment categories for additional commodities and adjusted payment rates for others as well. A full list of these commodities and their payment rates can be found here.
- To read the correction to the rule for updated payment rates, click here.
- To read the Notice of Funding Availability for information on new commodities, click here.
- Producers of specialty crops are eligible for CFAP payments in the following three categories:
- USDA’s Farm Service Agency will begin accepting applications on May 26, 2020.
- FSA has launched a webinar series to provide details on CFAP. A webinar specifically for specialty crop producers will be held on Tuesday, June 9, 2020 at 3 PM EST. The registration link will be available here.
- CFAP payments are subject to a per person and legal entity payment limitation of $250,000. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities.
- Unlike other FSA programs, special payment limitation rules will be applied to participants that are corporations, limited liability companies, and limited partnerships (corporate entities). These corporate entities may receive up to $750,000 based upon the number of shareholders (not to exceed three shareholders) who contribute at least 400 hours of active person management or personal active labor.
- To view a video of the CFAP Payment Calculator Preview, click here.
- Click here to view the CFAP final rule.
- Click here to view the notice of funding availability.
- Click here to view the cost-benefit analysis.
- Click here to view the CFAP FAQ.
- For more details on application and the CFAP program, click here or call 877-508-8364.
Paycheck Protection Program (PPP)
The Small Business Administration (SBA) is offering low-interest loans due to the damaging effects of the coronavirus. Please use the following information as a resource to learn more about SBA loans.
After the passage in both the House and the Senate of the Paycheck Protection Program Flexibility Act, the bill was signed by President Trump on June 5, 2020. The following information provides an overview of changes the bill would provide.
The Paycheck Protection Program Flexibility Act:
- extends the application deadline for PPP loans through the end of the year
- lengthens the time business owners have to spend the money from 8 weeks to 24 weeks
- provides applicants with flexibility to use more funds on necessary expenses like mortgage payments and utilities
- changes the 75/25 rule to 60/40 for loan forgiveness, which allows businesses to use 60% of funding on payroll and no more than 40% on other costs
- deferral period extended to a minimum of six months and a maximum of 1 year
- increases flexibility for rehiring employees to qualify for loan forgiveness
- allows employers to receive both PPP loan forgiveness and delayed payroll tax payments
- establishes a minimum term for new PPP loans of 5 years, but nothing prohibits existing PPP borrowers from renegotiating the term of their PPP loans
See below for resources and information on the Paycheck Protection Program:
- $310 billion for the New SBA 7(a) Paycheck Protection Program
- Final Rule for Paycheck Protection Program
- Interim Final Rule and Interim Final Rule on Affiliation
- Interim Final Rule – Additional Eligibility Criteria and Requirements for Certain Pledges of Loans (updated April 14)
- Applicable Affiliation Rules
- Starting April 3, 2020, small businesses and sole proprietorships can apply.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply.
- For additional information, please view the Paycheck Protection Program website here.
- Find an Eligible Lender
- Paycheck Protection Program FAQ (updated May 13)
- For a top-line overview of the program CLICK HERE
- If you’re a lender, more information can be found HERE
- If you’re a borrower, more information can be found HERE
- The application for borrowers can be found HERE
- On May 15, the SBA and Department of the Treasury released the PPP Loan Forgiveness Application, along with detailed instructions for application. Click here to view the application and instructions, which includes measures to reduce compliance burdens and simplify the process for borrowers. Those measures include:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
Economic Injury Disaster Loans (EIDL)
- $50 billion for the Enhanced SBA 7(b)(2) Economic Injury Disaster Loans (EIDL)
- Apply here now!
- This also includes $10 billion in additional funding for SBA’s EIDL Grant program.
- The passage of the Paycheck Protection Program and Health Care Enhancement Act expressly allows “agricultural enterprises” to qualify for SBA’s EIDL loans and grants.
- For additional information, please view the SBA website.
Rural Business-Cooperative Service Loan Guarantees
- $20.5 Million Additional for USDA’s Rural Business-Cooperative Service Loan Guarantees
Middle Market Program
- Middle Market Program
- U.S. Treasury Secretary Steven Mnuchin announced the establishment of the Main Street Business Lending Program on April 9, 2020.
- The program is designed to offer assistance to small and mid-sized businesses that were in good financial standing before the COVID-19 crisis by offering 4 year loans. Principal and interest payments will be deferred for one year.
- With funds appropriated under the CARES Act, Treasury will make a $75 billion equity investment in a special purpose vehicle established to implement the Program.
- Eligible Borrowers are businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues.
- Main Street loans will be a minimum of $1 million and a maximum of either $25 million or an amount that “when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization.”
- The Fed will purchase up to $600 billion in loans, with an interest rate equal to the Fed’s Secure Overnight Financing Rate, currently 0.01%, plus 250-400 basis points with a four-year maturity.
- Click here to view the Main Street Lending Program Frequently Asked Questions. (Updated May 27)
- For an overview of the program, please visit the Federal Reserve website.
- Main Street New Loan Facility Term Sheet (April 30)
- Main Street Priority Loan Facility Term Sheet (April 30)
- Main Street Expanded Loan Facility Term Sheet (April 30)
- On May 27, 2020, the Federal Reserve announced new documents for the Main Street Lending Program Forms and Agreements.
- For more information, please visit the US Department of the Treasury website.
- As more information becomes available, we will continue to share those details.
How does PACA play into this?
One of the most important regulations supporting the fresh produce trade is the Perishable Agricultural Commodities Act, and especially the PACA Trust. The PACA trust enables produce sellers to have first priority for repayment of debts in the event of a customer’s bankruptcy. Produce sellers actually have higher priority than banks, tax payments or any other debts in the event of a dissolution of assets to debtors.
We strongly advise you to be careful to not inadvertently waive your rights under the PACA trust. The USDA PACA branch has confirmed specific guidance.