Agricultural Enterprises Now Eligible for COVID-19 Economic Injury Disaster Loans

farmers_EIDLThe COVID-19 coronavirus outbreak is taking its toll on the agricultural sector and food supply chain. Public health closures and service restrictions have shuttered or curtailed farmers’ markets, restaurants, foodservice suppliers, and beef, poultry, and pork operations. The pandemic is a disaster for those in the agriculture community, just as it is for businesses across all parts of the economy. Reeling from the effects of the outbreak, “agricultural enterprises” were left wondering whether they could qualify to receive an Economic Injury Disaster Loan (EIDL) through the U.S. Small Business Administration (SBA). Fortunately, the latest round of coronavirus-related legislation makes it clear that they can.

While many agricultural enterprises were and remain eligible to receive loans through the Paycheck Protection Program (PPP), prior legislation barred most agricultural enterprises from obtaining an EIDL. Businesses excluded from such funding included “those small business concerns engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries.”

The reason for the exclusion was that the SBA did not want agricultural enterprises to “double-dip” and use its programs (including EIDLs) if they were also receiving the same assistance from the United States Department of Agriculture (USDA). However, current limitations on USDA disaster assistance programs mean that the department is not likely to provide any immediate relief to agricultural enterprises impacted by the COVID-19 crisis.

Since double-dipping in the present circumstances is unlikely, and because no funds are coming from the USDA, the economic aid bill signed into law last week removes restrictions on EIDL eligibility for agricultural enterprises. The legislation increases funding authorization for the loan program to $50 billion, up from $10 billion in the March economic relief package. Agricultural businesses can use EIDL funds to pay fixed debts, payroll, accounts payable, and other bills that a company cannot pay because of the ongoing COVID-19 crisis. You can find more information regarding EIDLs here.

Prospective borrowers must file their COVID-19 EIDL application by December 21, 2020. While the EIDL online application process is the fastest way to obtain a decision regarding loan eligibility, applicants have the option of submitting a paper application by mail or in person at any SBA Disaster Recovery Center. Filing an in-person claim provides the opportunity to receive one-on-one help from an SBA representative.

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We know this is an unprecedented, unnerving, and uncertain time for business owners. Kreis Enderle remains steadfastly committed to providing guidance, counsel, and advocacy to help our clients weather the storm.

If you have questions regarding obtaining an SBA emergency loan or have any other concerns or issues related to the COVID-19 pandemic, please contact the Business Law Practice Group at Kreis Enderle today.

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