The Paycheck Protection Program and Health Care Enhancement Act that was signed into law on April 24th included two notable provisions regarding Economic Injury Disaster Loans (EIDL) and grants.
- The funding for EIDL is increased from $10 billion to $20 billion
- Eligible entities are now amended to include agricultural enterprises with fewer than 500 employees.
Historically the SBA has determined that agricultural enterprises are not eligible for EIDLs in an attempt to prevent double dipping between the SBA and USDA’s disaster assistance programs. The SBA continued to exclude farmers with the exception of agricultural cooperatives, aquaculture enterprises, and nurseries after the CARES Act was signed on March 27th, 2020. There was a widespread belief that the SBA was not operating under the intent of the CARES Act by excluding farmers from receiving benefits under the EIDL program. However, Congress’ intent to include farmers under the CARES Act was made clear with the passing of the Paycheck Protection Program and Health Care Enhancement Act. The language of the Act defines agricultural enterprises as small businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquacultures, and all other farming and agricultural related industries. The newly enacted legislation explicitly revises the CARES Act to include this definition as an eligible entity, eliminating any doubt that farmers may qualify for EIDL benefits during the 2020 calendar year based on the effects of COVID-19 on their business.
With this revision, farmers with less than 500 employees are now eligible for EIDL loans and an EIDL emergency advance payment up to $10,000*. The advance payment is considered a grant, and is not required to be repaid. Even if a farmer is denied a loan under the EIDL they will not be required to repay any amounts they received in advanced as a grant. The advance payment must be used for the following purposes:
- Providing paid sick leave to employees unable to work due to the direct effects of COVID-19
- Maintaining payroll to retain employees during business disruptions or substantial slowdowns
- Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
- Making rent or mortgage payments
- Repaying obligations that cannot be met due to revenue losses.
*Currently the SBA is unable to accept additional applications for the EIDL program due to available appropriations funding. It is recommended that you monitor the SBA site updates as to when they may be able to accept new applications.
For more information on the loans available through the EIDL program please click here.
Here at Frost, PLLC we are actively monitoring the situation and are available to help you navigate these turbulent times.
Please contact your Frost representative(s) with any questions.