Alabama farms, nurseries and other ag businesses may be eligible for forgivable loans under the Coronavirus Aid, Relief and Economic Security Act.
Alabama Farmers Federation National Affairs Director Mitt Walker said the Paycheck Protection Program (PPP) is designed to help small businesses and employees weather the economic downturn. The $2 trillion package includes $349 billion for the PPP.
“The program helps small businesses keep employees on the payroll by providing guaranteed loans, which may be forgiven,” Walker said.
Eligible businesses include limited liability companies (LLC), S corporations, sole proprietorships, contractors, and nonprofits with 500 or fewer employees. Loans are capped at $10 million but can include up to eight weeks of average monthly payroll costs from last year plus an additional 25% of non-payroll costs. Other calculations apply to seasonal and new businesses. The PPP ends June 30.
According to the Small Business Administration (SBA), PPP loans will be forgiven if all employees are kept or quickly rehired and compensation levels are maintained for eight weeks.
To be forgiven, funds must be for:
Payroll and benefits
Mortgage interest incurred before Feb. 15, 2020
Rent, under lease agreements in force before Feb. 15, 2020
Utilities, for which service began before Feb. 15, 2020.
SBA anticipates a high subscription rate. As a result, non-payroll costs are likely to be capped at not more than 25% of the total loan amount. Borrowers will still owe money if the loan is used for non-qualified expenses or if staff and payroll are not maintained.
Applications are open for small businesses and sole proprietorships and open April 10 for independent contractors and the self-employed.
Visit SBA.gov for a list of SBA lenders.