The latest COVID-19 relief package announced late last year included updates to the Paycheck Protection Program (PPP).
The improvements to the program benefit farmers and ranchers by including new qualifying expenses, using gross farm income to determine loan amounts and reducing the level of required losses to qualify.
The program provides forgivable loans to small businesses, including agriculture, to keep employees on the payroll.
The legislation provides $284 billion in funding for a second round of PPP loans and several improvements for which Farm Bureau advocated.
Among them is a clarification that allowable expenses that had been paid for with forgiven PPP loans may be taken as a business deduction for income tax purposes without limitation. This is an important distinction for farmers, because the Treasury Department’s 2020 regulations denied PPP participants the ability to deduct these expenses, going against the intent of Congress.
The bill also cut in half the qualifying reduction in gross revenue–dropping it from 50 percent to 25 percent—between comparable quarters in 2019 and 2020.
This much-needed change for farmers and ranchers who suffered multiple years of losses expands the number of farm and ranch families who can qualify to participate.
The bill’s switch to gross income from net farm income for the loan requirement calculation for farmers and ranchers who file as sole proprietors will allow many more producers to participate. The previous net-farm-income-based method for establishing loans left many self-employed farmers ineligible because they had reported losses.
Also, farmers and ranchers applying for loan forgiveness through the program for loans under $150,000 will have a new streamlined process.
Businesses with no more than 300 employees that received loans last year are eligible for this second round of PPP loans but at a reduced loan cap of $2 million.
The loan application deadline for the second round of PPP loans is March 31 or until funds are exhausted.
Click here for more information about PPP loans from the Small Business Administration.