Editor's Note--BEEF has learned that some banks may not be tooled up to handle loan requests right away. Contact your lending institution before heading to town to ensure they are prepared.
The giant CARES Act that Congress passed in March does contain help for small businesses to keep workers on the job during the worst of the COVID-19 outbreak. Small means any business with fewer than 500 employees. That 500-person rule applies to a single physical location, not the corporation’s total workforce.
Beginning Friday, April 3, businesses can apply for the payroll expenses for two months’ worth of wages, plus some costs of utilities. That is contingent on the employees not having been laid off. If so, they must be re-hired. The records to be readied aren’t complicated; most businesses have readily available and backup documentation isn’t tough. The biggest hassle is likely to be at your banker or farm credit service desk, where there is likely to be a line or a phone queue.
Any bank that is an SBA-approved lender will be participating, including most major national banks.
A March 27 news release from USDA indicated that $9.5 billion in the CARES Act was allocated for helping agricultural producers impacted by the virus outbreak. But we could not find any further info on USDA’s website. We’ve made further requests for info. A letter signed by 145 Congressmen was sent to USDA Secretary Sonny Perdue April 1, asking that the procedure for helping cattle producers be implemented as soon as possible.
In general, apparently a business is going to need figures for average monthly payroll, that amount times 2.5 and the number of employees involved. The form also specifies that no less than 75% of the total amount applied for be for payroll expenses.
Other eligible expenses are rent or mortgage interest and utilities. There is an “other” category but no detail. There are extensive explanations of what kind of business organizations are eligible. Any owners with more than 20% ownership is to be listed on the application.
This is a loan request program, at 1% interest according to the SBA, but is intended to be forgiven at the time the first payment is due, according to the information given out. According to the American Enterprise Institute, borrowers will only need to provide documentation after the fact that the money was used to pay employees, rent, mortgage interest or utilities between Feb. 15 and June 30 to get the loan forgiven. All fees involved will be paid to banks by the government. The usual SBA requirements to assess ability to repay the loan, etc. will not be necessary for these loans.
Steve Dittmer is a longtime beef industry commentator and executive vice president of the Agribusiness Freedom Foundation. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.