The U.S. Department of Treasury (Treasury) and Small Business Administration (SBA) released an interim final rule on the Paycheck Protection Program (PPP). While SBA still needs to confirm some administrative details, loans will be provided on a first-come, first-served basis and producers can get started on the application now.
- For a top-line overview of the PPP program CLICK HERE
- Information for prospective borrowers can be found HERE
- The application for borrowers can be found HERE
Below please find additional details about the PPP program. We will answer outstanding issues once SBA provides further guidance.
- Program Eligibility
- All businesses (including farm and ranch businesses) are eligible for a PPP loan if they (1) have fewer than 500 employees; (2) meet the definition of a “small business concern”; and (3) are subject to SBA’s affiliation rules (unless those rules were specifically waived in the CARES Act).
- Waiting on SBA to clarify the definition of “small business concern” – do not anticipate any undue restrictions.
- Waiting on SBA to confirm whether H2A workers are counted as “employees” for the purposes of determining size.
- Financial institutions, including the Farm Credit system, will be responsible for processing loan applications and administering the loan.
- Loan Terms
- Loan amounts are calculated based on the payroll costs for all employees whose “principal place of residence” is in the U.S. Please note that this definition excludes H-2A workers, which will likely reduce the loan amount available to some agricultural producers.
- This loan has a maturity of 2 years and an interest rate of 1%. Loan payments will be deferred for the first six months.
- The loan 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.
- Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
- The best POC for questions on the Paycheck Protection Program is the Lender Relations Specialist in your local SBA Field Office. The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices.