Senators seeks guidance on excluding CFAP payments from 2020 gross receipts in confirming 25% losses.
Around 60,000 borrowers were approved for more than $5 billion in forgivable loans during the first week of the reopened Paycheck Protection Program, according to the Small Business Administration. However, many farmers have been reluctant to use PPP this round due to the requirement to prove a 25% loss.
Sens. John Thune, R-SD, and Tammy Baldwin, D-Wisc., urged the U.S. Department of Treasury and SBA to issue guidance excluding Coronavirus Food Assistance Program payments from farmers’ and ranchers’ 2020 gross receipts for purposes of obtaining a second draw loan through the Paycheck Protection Program.
“Recognizing the significant market volatility and financial hardships farmers and ranchers across the country faced because of the coronavirus pandemic, last year Congress provided the U.S. Department of Agriculture authority and funding to support producers,” the senators write. “As a result, USDA established CFAP, which provided critically needed financial assistance to producers to ensure they were able to continue providing our nation with a safe and abundant food supply.
“We respectfully request that you clarify through additional guidance or an FAQ that CFAP payments provided to farmers and ranchers in 2020 do not count toward gross receipts for purposes of demonstrating a 25% reduction in revenue in 2020 compared to 2019,” reads a letter sent to the Small Business Administration and Department of Treasury.
Interim final rules issued in early January outline how businesses must demonstrate a 25% reduction in gross receipts, but it is unclear if CFAP payments would disqualify certain farmers and ranchers.
“Prior to this newest PPP round, the SBA supported 5.2 million PPP loan borrowers, providing more than $525 billion in economic relief to small businesses and other eligible entities. The Agency is committed to making sure compliance checks are executed on the front-end. The SBA is also committed to addressing issues more efficiently moving forward, to ensure fair and equitable access to small businesses in every community,” says SBA Acting Administrator Tami Perriello.
Related: PPP changes in COVID relief bill offer more aid for farmers
The small-business coronavirus relief effort relaunched January 11 after closing last August. The first wave of applications was largely handled by community and small lenders after the SBA set aside time for them to process the loans exclusively.
The National Sorghum Producers says it is pleased the most recent stimulus package passed by Congress in December grants farmers expanded access to PPP, and NSP encourages producers to look into the opportunity the program provides.
“Even if a producer did not qualify for PPP in the spring, they could qualify under the new expanded access,” NSP says in its Feb. 4 newsletter.
Michael Fuchs, director of commercial lending at Wolters Kluwer, recently reviewed SBA guidance unique to PPP farm and ranch borrower in an online presentation.
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