December 30, 2020
The Farm Credit Group here at Nexsen Pruet has compiled the highlights from the Coronavirus Response and Relief Supplemental Appropriations Act (recently passed as part of the Consolidated Appropriations Act of 2021) that would pertain to those in the farm credit and agribusiness realm.
There were many substantial changes to the Paycheck Protection Program (PPP), which are discussed at length in our other articles. However, the following two highlights are notable:
1. Section 313 “Calculation of Maximum Loan Amount for Farmers and Ranchers under the Paycheck Protection Program” establishes a specific loan calculation for the first round of PPP loans for farmers and ranchers who operate as a sole proprietor, independent contractor, or self-employed individual, who report income and expenses on a Schedule F and were in business as of February 15, 2020. These entities may utilize their gross income in 2019 as reported on a Schedule F. Such borrowers may request that lenders recalculate loans that have been previously approved if they would result in a larger loan. This series of provisions apply to PPP loans before, on, or after the date of enactment, except for loans that have already been forgiven.
2. Section 314 “Farm Credit System Institutions” allows Farm Credit System Institutions to make loans under the PPP and the new Second Draw Loan program, allows for a zero risk weight for such loans, and applies eased requirements for other lenders to those within the Farm Credit System.
The Act also provides other relief, including nutrition-and agriculture-related relief.
- Section 281 “Election to Waive Application of Certain Modifications to Farming Losses” allows farmers who elected a two-year net operating loss carryback prior to the CARES Act to elect to retain that two-year carryback instead of the five-year carryback dictated by the CARES Act, and allows farmers who waived an election to carry back a net operating loss to now revoke the waiver. The provision applies retroactively as if included in the CARES Act.
- Section 752 “Specialty Crop Block Grants” provides $100 million in additional funding to support specialty crop farmers through the farm bill’s Specialty Crop Block Grant Program.
- Section 753 “Local Agriculture Market Program” provides $100 million in additional funding to support local farmers, farmers markets, and value-added production for farmers who have been affected by COVID-19 market disruptions through the farm bill’s Local Agriculture Market Program.
- Section 754 “Farming Opportunities Training and Outreach Program” provides $75 million to the farm bill’s Farming Opportunities Training and Outreach Program to support groups providing beginning, socially disadvantaged, and veteran farmers and ranchers with financial and marketing advice and technical assistance, including help in accessing federal and state assistance.
- Section 765 “Meat and Poultry Processing Study and Report” requires a report on the availability of financing for new and existing meat and poultry processing capacity.
- Section 766 “Support for Farm Stress Programs” provides $28 million in form of block grants to state departments of agriculture to support existing farm stress programs.
Please reach out to a member of our team if there is anything we can do to help you navigate these changes and programs.