Loans now available for farmers, agribusinesses
According to a press release from the Alabama Department of Agriculture and Industries (ADAI), the U.S. Department of Treasury and the Small Business Administration (SBA) have released an interim final rule regarding small business loans to help farmers and other agribusinesses weather the unprecedented economic disruption caused by the ongoing coronavirus pandemic.
Farms and agribusinesses are now eligible for Paycheck Protection Program (PPP) loans, approved in a recent COVID-19 relief package, as long as they employ less than 500 workers 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 loans, which are subject to the SBA’s affiliation rules.
“Farmers and agribusinesses feed America and this program can provide some much-needed relief for our producers based on eligibility,” said ADAI Commissioner Rick Pate. “I encourage them to get started on the application now.”
The press release notes that, though there are some administrative details the SBA needs to confirm, agricultural producers are now eligible for loans, which will be awarded on a first-come, first-served basis.
Eligible businesses include limited liability companies (LLCs), S corporations, sole proprietorships, contractors and nonprofits with 500 or fewer employees.
Loans will be capped at $10 million, but can include up to eight weeks of average monthly payroll costs from the previous year, with an additional 25 percent of non-payroll costs, with different calculations applied to seasonal and new businesses.
Loans will have an interest rate of 1 percent and mature in two years, with loan payments being deferred for the first six months – the loan amounts will be calculated based on the payroll costs of all employees whose “principal place of residence” is in the U.S.
If at least 75 percent of the funds are used on payroll costs, with the rest being used for interest on mortgages, rent and utilities, the loans will be fully forgiven.
Loan forgiveness will also be based on an employer maintaining, or quickly rehiring, workers at the same hiring level.
Loan applications will be accepted through June 30, 2020, and prospective borrowers are encouraged to contact Lender Relations at the local SBA Field Office, which for Selma is in Birmingham and can be reached at 205-290-7101.