Cantafio Nagel & Song PLLC is continuing to monitor updates on government relief programs created to help members of our community through the coronavirus pandemic. Last week, I posted information on our blog that covered the United States Department of Agriculture (USDA) Coronavirus Food Relief Program for agricultural producers. While the specifics of the application process for direct payments have not yet been finalized by the agency, information from the previous blog post has been confirmed, and more opportunities for agricultural producer relief have become available through the Small Business Administration.
The USDA Coronavirus Food Assistance Program allocated $19 billion for direct payments to farmers and ranchers. A source within the USDA has confirmed that the funding will be broken down into $9.6 billion for livestock (including $5.1 billion for cattle, $2.9 billion for dairy, and $1.6 billion for hogs), $3.9 billion for row crops, $2.1 billion for specialty crops, and $500 million for other crops. More specific details will be available when the USDA sends their proposed rules to the White House Office of Management and Budget and the White House Task Force approves the information to be released.
On Monday, May 4th, the U.S. Department of Agriculture Secretary Sonny Perdue announced that for the first time, agricultural producers are eligible for the Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) and EIDL Advance programs. The EIDL portal has been closed since April 15, but funding authorized by Congress through the Paycheck Protection Program and Healthcare Enhancement Act has allowed the SBA to reopen the application portal to agricultural enterprises only. The amount of funding for this iteration of emergency small business loans in limited, so time is of the essence to secure relief. Application for disaster assistance can be done here: https://www.sba.gov/disaster.
Agricultural business eligible for the loans include those that produce food and fiber, ranching, and raising livestock, aquaculture, and all other farming and agricultural related industries. The Small Business Administration is encouraging all eligible agricultural business with 500 for fewer employees wishing to apply to begin preparing their financial information needed for the process, such as gross revenues and cost of goods sold for the twelve months prior to January 31, 2020. Restrictions on eligibility include a prohibition on illegal activity defined by Federal guidelines, owner delinquency on child support payments, and government entities.
Vickie Felder with the USDA Agricultural Marketing Service confirmed that licensed hemp producers would be eligible for the direct relief payments as either a specialty crop or other crop, so long as the commodity has experienced a 5% price decrease between January and April. She also reported that hemp producers would be able to receive economic injury disaster loans through the Small Business Administration. Felder cited a memo released by the USDA last month that provides guidelines for servicing direct and guaranteed federal loans for the hemp industry and identifies the requirements a hemp business must meet to use USDA lending services, such as being licensed under an approved state hemp program and a restriction on license or loan transfer. The memo said of hemp that “while it’s understood that this new commodity will likely produce some servicing challenges because of State and Federal regulations, it should be treated as closely as possible to any other agricultural commodity and services in the same manner.”
An informal poll conducted by Hemp Industry Daily showed that about 54% of hemp and CBD companies that applied for the initial round of SBA loans as a part of the coronavirus relief package have not yet heard if they received loans. Of the other companies polled, 10% said they received a Paycheck Protection Program loan, 7% received an Economic Injury Disaster Loan, 12% applied for loans but were denied, and 17% said their loans were unfulfilled.
While hemp has been able to receive some assistance under the new programs, marijuana continues to be barred from federal assistance. In April, 10 senators sent a letter to the chamber’s leadership urging future legislation to give cannabis companies access to SBA support. Governor Jared Polis also sent a letter to the Colorado congressional delegation requesting that they ensure cannabis industry access to the SBA.
For more information on developments in the USDA Coronavirus Food Assistance Program, check the Cantafio Nagel & Song PLLC Blog. The firm is also offering free one-hour consultations to help those affected by COVID-19 have access to assistance with applying for loans through the Small Business Administration or USDA, attorney support, and satisfaction of their legal needs. Click here to learn more about Charles Feldmann.