Disaster loan program opens for farmers
Monday, May 4, 2020
Posted by: Joanna Guza
From Aaron Stauffacher, associate director of government affairs
Today, the Small Business Administration (SBA) announced the reopening of the Economic Injury Disaster Loan (EIDL) program. Applications will be limited only to provide relief to agricultural businesses, including farms.
SBA will process these applications on a first-come, first-served basis. We encourage you to act quickly due to a limited amount of funds. Farms and businesses apply directly to SBA online.
We encourage you to discuss the potential benefits and rules with your financial provider.
Here are the basics:
Emergency Economic Injury Disaster loans and advancements
Farms were not previously eligible for the EIDL program until Congress allowed farmers and other agricultural enterprises to enroll. This change means agricultural businesses defined as “businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries” can apply for low-interest loans and qualify for up to a $10,000 emergency loan advance that does not have to be repaid.
To be eligible, a business must show economic harm as a result of the crisis.
The EIDL loans are to be used to help overcome the loss of revenue to pay fixed debts, payroll, sick leave and other like costs. The maximum loan is $2 million and carries an interest rate of 3.75 percent for businesses and 2.75 percent for non-profits. The loans cannot be used to refinance debt incurred prior to the crisis, pay other federal debt, pay tax penalties or government fines, repair physical damage or pay owners’ dividends other than those needed to continue the business. EIDL loans must be repaid.
Farmers can receive both EIDL and Paycheck Protection Program (PPP) loans, but funds cannot be used to cover the same expenses.
The emergency loan advances, which do not have to be repaid, are limited to $1,000 per employee with a maximum of $10,000. If your business also received a PPP loan, proceeds from the non-repayable EIDL loan advance will be deducted from the loan forgiveness amount on the PPP loan.
You can directly apply for an EIDL loan and a non-repayable EIDL loan advance on this SBA website.
We will continue to closely monitor program announcements and keep you up to date.