How to apply for the Paycheck Protection Program for your ranch

There is a new government program called the Paycheck Protection Program that is meant to help businesses keep employees on staff during the economic downturn caused by COVID-19. Alexis Bonogofsky of the Quivira Coalition participated in an informational webinar put on by an organization called Farm Commons that went over the details of how you can utilize the program.

In this post, adapted from an email Alexis sent following the webinar, she summarizes the most pertinent information from that session. A recording of the webinar is available at the link below: Alexis recommends you watch the whole thing if you have the time.

Act Now

If you are going to pursue this you have to do it as soon as possible. We’ve heard some banks have already stopped accepting applications due to the sheer number of people applying. 

What is the PPP?

If you follow the right steps, the PPP is a forgivable loan to cover up to 2 months of payroll costs and/or self employment income, plus portion of rent, utilities, and mortgage interest.

Farmers and Ranchers ARE ELIGIBLE

1. Eligible to cover current employees (W-2’s) if you are an existing farm that had employees on W2s during March through June of 2019. Easiest and best bet for most. 
2. Eligible for self-employed income (but this is tricky to show for farmers/ranchers). Not much guidance here so you’d have to talk to your lender.
   1. Possibilities of how to calculate: Prorated portion of net income from 2019 across Feb 15 to June 30.
   2. Cash distributions or guaranteed payments during same period.
3. Not eligible to help pay for 1099 independent contractors. 
4. Not eligible for H2A workers

How much PPP covers

• 2.5x your average monthly payroll including: Wages, salaries, paid leave, health care benefits, state and local taxes but probably not federal taxes. 
• Non payroll costs are for specific financial obligations incurred prior to February 15, 2020: Mortgage interest, rent, & utilities

How to apply

1. If you are planning on applying, do it as soon as possible. Banks are processing applications on a first come, first served basis. $349 Billion available, they may make more available, but that’s not certain. 
2. Talk to your current lender and ask if they are participating in the PPP. If so, work through your current bank. 
   1. If not, you’ll need to find a lender who is. SBA has a list of lenders participating in the program and you can sort by zip code.  
   2. Once you find a bank (if it isn’t your current one) you’ll need to ask who they are lending to. Some are only lending to existing customers and some have already stopped accepting applications.
3. Ask for their application and supporting documents list. Each lender will be a little bit different. 
4. Turn in application.

How to get the loan forgiven

1. Ask your lender for specifics but… be sure to document the number of FTE employees and pay rates, plus payments to mortgage interest, lease, and utility payments. Remember that FTE does not mean number of employees, it means full time equivalent. If you have two part time employees that would be 1 FTE.

Finally, here is the official Small Business Administration website on the Paycheck Protection Program: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

If you have questions, feel free to post them as comments below and we’ll be sure to connect you to the resources or people who can help!