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Why Aren’t Farmers Included in Disaster Loans?

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The Coronavirus Aid, Relief, and Economic Security Act (CARES) has within its Title I Section 1110 entitled “Emergency EIDL grants.” The Small Business Administration (SBA) states on its website, “The SBA’s Economic Injury Disaster Loan (EIDL) provides vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic.”
All but farmers, apparently.

SBA’s webpage talks about the program being available to any small business with less than 500 employees, sole proprietorships, independent contractors, self-employed individuals, private nonprofit veterans’ organizations, and private nonprofits. Section 1110 of the CARES Act states from January 31, 2020 to December 31, 2020 the following entities are eligible to receive EIDL money grants. The statute lists businesses with not more than 500 employees, any sole proprietorship with or without employees, independent contractors, a cooperative with not more than 500 employees, a small tribal business concern with not more than 500 employees, private nonprofit organizations, and small agricultural cooperatives. 

Not once in the statute is the farmer mentioned.

This statute gets better. The SBA Administrator must waive “…any rules related [to] the personal guarantee on advances and loans of not more than $200,000; need to be in business for one-year before the disaster and approve an applicant based solely on the credit score of the applicant and shall not require an applicant to submit a tax return or a tax return transcript for such approval…”
Under the Emergency Grant section of the Act, it declares any small business concern, private nonprofit or any “small agricultural cooperatives” may request from the Administrator of the SBA an advance amount of money. In fact, if you qualify, your entity can receive an advance of $10,000. You must use this $10,000 to provide paid sick leave, your payroll, increased costs due to rising prices of materials, making rent or mortgage payments and repaying obligations that cannot be met due to lost income.

Loan repayment
An approved applicant does not have to repay any of the $10,000 even if it is subsequently denied a loan under EIDL. 

$10 billion was the amount Congress appropriated for this emergency loan program. In Section 111 of the CARES Act, “The Administrator shall provide the resources and services made available by the Administration to small business concerns in the 10 most commonly spoken languages, other than English, in the United States, which shall include Mandarin, Cantonese, Japanese, and Korean.” 
There is also authorized $25 million to carry out this language provision.

I have been advised by two farming operations that the Small Business Administration Disaster Loan Application declares farmers are INELIGBLE for this loan program. Yet, nothing in the statute precludes farmers from applying for this emergency grant of $10,000. Yet, in reviewing the Disaster Loan Assistance document, we see that OMB control #3245-0406 Expiration Date: 09/30/2020 states clearly that one is “not eligible” for an emergency loan. The applicant must swear that “Applicant is not an agricultural enterprise (e.g., farm), other than an aquaculture enterprise, agricultural cooperative, or nursery.” 
Also, farmers will appreciate knowing they are lumped in with businesses involved with prurient sexual nature and derive their gross revenue from the sale of products and services that involve depictions or displays of a prurient sexual nature. 

As stated earlier there is absolutely nothing in the statute which precludes farmers and farming operations from applying for the EIDL Emergency Loans except some bureaucrat in Washington, DC. 
Farm organizations are working to change this exclusion of farmers from the EIDL program.

This commentary originally appeared in the February 14, 2020 edition of Farm Futures.

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