MONTGOMERY, Ala., April 23 — Alabama Farmers Federation is encouraging farm businesses to apply quickly for an additional $310 billion in forgivable loans approved today by Congress. Experts predict the funds could run out within 72 hours.
The Small Business Administration’s (SBA) popular Paycheck Protection Program (PPP) depleted $349 billion from the $2 trillion COVID-19 stimulus package in about two weeks. Lawmakers have been scrambling to replenish the program for a backlog of small businesses with pending applications as well as those yet to apply.
“Farm businesses with a payroll who are interested in the PPP should go ahead and get their paperwork ready today,” said Federation National Affairs Director Mitt Walker. “PPP applications are approved on a first-come, first-served basis. We encourage members contact their bank or lender, so they are ready when the funds become available.”
President Donald J. Trump is expected to sign the additional $484 billion in COVID-19 relief. In addition to the PPP funding, the latest package includes another $75 billion for hospitals and health care providers and $25 billion to expand coronavirus testing.
Businesses eligible for the PPP include limited liability companies (LLC), S corporations, sole proprietorships, contractors and non-profits with 500 or fewer employees. Loans are capped at $10 million, but can include up to eight weeks of average monthly payroll costs plus an additional 25% of non-payroll costs.
According to the SBA, loans will be forgiven if all employees are kept or quickly rehired and compensation levels are maintained for eight weeks. To be forgiven, loan funds must be used for payroll and benefits; mortgage interest; rent and utilities.
Farm Bureau Bank can assist Federation members in applying for the PPP.
“Many members are challenged with accessing these funds due to huge backlogs at large national banks…,” said Farm Bureau Bank President and CEO Will Hileman. “The demand is enormous, and we expect this round of funding to run out in a just a few short days. We encourage members to act now and apply if they want access to the program.”
The latest stimulus package also makes farmers eligible for Economic Injury Disaster Loans (EIDL) from the SBA. Unlike the PPP, these loans must be repaid at an interest rate of 3.75%. The maximum loan value is $2 million for a 30-year term. EIDL loans may require collateral, and SBA can require repayment before any other debt is satisfied.
“The most attractive feature of the EIDL program is it provides a forgivable advance up to $10,000 (or $1,000 per employee) for businesses strapped for cash,” Walker said.