Paycheck Protection Program: Producers Can Apply Now

New information from NY State Department of Ag and Markets on the new federal Paycheck Protection Program:

Question: How can I access the federal Paycheck Protection Program for my agricultural or food related business?

The Department of Treasury and Small Business Administration (SBA) released an interim final rule on the Paycheck Protection Program (PPP). Agricultural producers and food processors are eligible to participate in the program and should reach out to their bankers and/or agricultural lenders to apply immediately. While SBA still needs to confirm some administrative details, loans will be provided on a first-come, first-served basis and producers and processors can get started on the application now.

The best Point of Contract for questions on the Paycheck Protection Program is the Lender Relations Specialist in your local SBA Field Office.  The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices.


Enforce “New York State on PAUSE” at Your Farm

The 10-point plan applies to everyone in New York state, including everyone working on farms. Farm managers should  reinforce with all employees the importance of following all of these orders for the safety of everyone, this is not optional. Here is a Spanish-language poster with the same 10 points that you can print.

Form the government of the State of New York:

Governor Cuomo announced the “New York State on PAUSE” executive order, a 10-point policy to assure uniform safety for everyone.

The 10-point NYS on PAUSE plan is as follows:

  1. Effective at 8PM on Sunday, March 22, all non-essential businesses statewide will be closed;
  2. Non-essential gatherings of individuals of any size for any reason (e.g. parties, celebrations or other social events) are canceled or postponed at this time;
  3. Any concentration of individuals outside their home must be limited to workers providing essential services and social distancing should be practiced;
  4. When in public individuals must practice social distancing of at least six feet from others;
  5. Businesses and entities that provide other essential services must implement rules that help facilitate social distancing of at least six feet;
  6. Individuals should limit outdoor recreational activities to non-contact and avoid activities where they come in close contact with other people;
  7. Individuals should limit use of public transportation to when absolutely necessary and should limit potential exposure by spacing out at least six feet from other riders;
  8. Sick individuals should not leave their home unless to receive medical care and only after a telehealth visit to determine if leaving the home is in the best interest of their health;
  9. Young people should also practice social distancing and avoid contact with vulnerable populations; and
  10. Use precautionary sanitizer practices such as using isopropyl alcohol wipes.

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CARES Act’s Emergency Resources for Farm Businesses: Paycheck Protection Loan Program

By Elizabeth Higgins, Ag Business Management, Cornell Cooperative Extension Eastern NY Commercial Hort Team (emh56@cornell.edu or @CCE_AgMgmt)

The recent CARES Act provided additional emergency funding through Small Business Administration (SBA) for businesses who are facing losses due to COVID-19.  If you are a farm business, the most important program to be aware of right now is the Paycheck Protection Loan Program, which was authorized in the CARES Act. Farms that meet SBA small business thresholds are eligible to apply for this low interest, forgivable loan program.  Please note that SBA’s definition of a small business and USDA’s definition of a small farm are NOT the same and you are held to the much more generous SBA standard (generally fewer than 500 employees) for this program.

Paycheck Protection Loans will be available starting on April 3, 2020 to cover payroll costs, utilities, mortgage interest or rent.  The interest rate on the Paycheck Protection Loan is .5%, with a maturity of 2 years.  The first payment due is delayed for 6 months from origination of the loan.  For many businesses this loan could be a very affordable way of accessing working capital this year by freeing up the cash you have on hand for other purposes.

Paycheck Protection Loans will be made by any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.  If you have a relationship with a bank, you can check to see if they are approved as a lender by SBA or are participating in this program.  The loans require no collateral, no personal guarantees, and no borrower or lender fees payable to SBA and the loans are 100% guaranteed by the US Government.  The information about the program is https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp.

The actual amount you are eligible to receive for a loan will be determined by a formula based on your average monthly Payroll Costs during the 12-month period before the loan is made multiplied by 2.5 [See note below].  Paycheck Protection Loans are subject to a $10 million cap.

Besides the low interest rate, the most attractive part of the Paycheck Protection Loan Program is loan forgiveness.  Borrowers may apply to their lender for forgiveness of Paycheck Protection Loans. The amount that may be forgiven will be equal to amounts from the loan used by the borrower during the eight-week period beginning on the date the loan is initially funded for the following uses:

  • payroll costs,
  • mortgage interest payments,
  • rent payments, and
  • utility payments.

The amount forgiven may not exceed the principal amount of the loan. SBA anticipates that the forgivable amount of the loan that is used for non-payroll costs will be limited to 25% of the total amount forgiven. So for a $10,000 loan only $2,500 of non-payroll costs could be forgiven.  This is because the primary purpose of the program is to help businesses afford to keep workers employed.  You can only apply for this loan once, so it would make sense, given the low interest rate, to make sure that you apply for the amount you need to maintain liquidity and keep your business viable – not just take advantage of the grant-portion of the program.

Eligible payroll costs that can be paid for by the loan include:

  • salary, wage, commission or similar compensation (subject to a limit of $100,000 per person in wages paid per year or for payments to any independent contractor),
  • a cash tips or equivalent,
  • payment for vacation or parental, family, medical or sick leave,
  • allowance for dismissal or separation, and
  • payments for group healthcare benefits, retirement benefits, and state and local taxes assessed on employee compensation.

Payroll costs that can be covered by the loan do not include income tax withholding for wages, any compensation to any employee whose principal residence is not in the United States, and qualified sick leave wages or qualified family leave wages for which a credit is allowed under the Families First Coronavirus Response Act. The limitation on employees whose principal residence is not in the US would likely restrict the use of these funds for H2A wages.  The rules for this program have not been written yet so that could change.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. Borrowers that rehire employees will not be penalized for having a reduced payroll at the time of the loan. Specifically, the amount of loan forgiveness will not be reduced as a result of a reduction in employees or in wages and salaries that occurred between February 15, 2020 and 30 days after the enactment of the CARES Act, if the reduction is reversed by June 30, 2020.

Any amounts forgiven under a Paycheck Protection Loan will be excluded from income for tax purposes. However, taking advantage of forgiveness under the Paycheck Protection Loan Program may disqualify an employer from the payroll tax deferral benefit under the CARES Act, and receipt of a Paycheck Protection Loan is an alternative to the wage credit available under the CARES Act for businesses experiencing a closure related to COVID-19.

Businesses that wish to obtain a Paycheck Protection Loan will need to confirm that they are a small business or other eligible recipient, use the proceeds for only authorized purposes and, assuming they wish to take advantage of loan forgiveness, determine how much of the Paycheck Protection Loan will be forgivable.  SBA has made a sample application form available so that you can see what is likely to be asked, https://www.sba.gov/document/sba-form–paycheck-protection-program-ppp-sample-application-form but this is not the final form as the program is still in development as of (4/2/2020).

It is also important to know that new programs are being developed at warp speed – this information may be dated by the time you read this! So, if this program is not a good fit for your COVID-19 losses, there will be other programs or rule changes soon, and you should also let your local elected officials and industry groups know what your business needs are.  Also keep in touch with your CCE contacts, lender, or other industry groups you belong to for updates.  The Cornell EDEN website is the hub of information for COVID-19 issues and resources https://eden.cce.cornell.edu/coronavirus-response/. The Cornell Ag Workforce Journal https://agworkforce.cals.cornell.edu/ is a great resource for updates on labor management issues and programs and policies related to ag workforce issues and COVID-19 and the Cornell Small Farms Program is keeping a list of resources for farms impacted by COVID-19 https://smallfarms.cornell.edu/resources/farm-resilience/.


[Note] For purposes of calculating “Average Monthly Payroll”, most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee.  For seasonal businesses, the Applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee.  For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.

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Permission granted to repost, quote, and reprint with author attribution.
The post CARES Act’s Emergency Resources for Farm Businesses: Paycheck Protection Loan Program appeared in The Ag Workforce Journal 

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Interim Guidance for Farmer’s Markets from NYS Ag & Markets

The New York State Department of Agriculture and Markets on March 31, 2020 released “Interim Guidance for the Operation of Farmers’ Markets,” you can find a PDF of the document at the following link: https://agriculture.ny.gov/system/files/documents/2020/03/interimguidancefarmersmarkets.pdf

Find more information at COVID-19 response:

Need information? View the following Cornell CALS and CCE Resource Pages Updated Regularly

General Questions & Links:
https://eden.cce.cornell.edu/

Food Production, Processing & Safety Questions:
https://instituteforfoodsafety.cornell.edu/coronavirus-covid-19/

Employment & Agricultural Workforce Questions:
https://agworkforce.cals.cornell.edu/

Cornell Small Farms Resiliency Resources:
https://smallfarms.cornell.edu/resources/farm-resilience/

Financial & Mental Health Resources for Farmers:
https://www.nyfarmnet.org/

Informational videos about Coronavirus in Spanish and Mam (spoken by many Guatemalans):

www.farmworkers.cornell.edu 

www.trabajadores.cornell.edu 

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Guidance for Respirator Fit Testing from NYCAMH

The NY Center for Agricultural Medicine and Health, NYCAMH, normally provides respirator fit testing clinics to be sure safety equipment is properly protecting farm employees from pesticides. In this time of COVID-19 there are significant changes to this process, please see the following website for guidance from NYCAMH:
https://www.nycamh.org/programs-and-services/respirator-fit-test-clinics.php.

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COVID-19 and Your Produce Farm webinar 

Steps that produce farm managers and individuals working with fruit and vegetable farms should consider to protect their workforce, their business, and their markets 

April 3, 2020 | 10-11:30 am EDT

Link to join COVID-19 and Your Produce Farm webinar

This webinar will be led by Richard Stup, PhD, Cornell Agricultural Workforce Development, Elizabeth Bihn, PhD, Director of Produce Safety Alliance at Cornell, and Anu Rangarajan, PhD, Director of the Cornell Small Farms Program. It will cover: why prevention of the coronavirus/COVID-19 is important, steps that employers should take to protect employees, how to manage cleaning and disinfection in the workplace and employee housing, state and federal sick leave and workforce reduction policies, and disaster contingency planning to manage and prevent the spread of COVID-19 on-farm. 

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Novel coronavirus prevention & control for produce farms

Richard Stup, Cornell Agricultural Workforce Development, has tips for employers regarding novel coronavirus prevention and control on farms. 

  1. Talk with your employees about coronavirus, how it spreads, and how to prevent getting infected. 
  2. Print the CDC factsheets and posters, post in your workplace and employee housing facilities. 
  3. Provide guidance to help employees clean and disinfect employer-provided housing. Follow up with employees and manage the process to be sure that this happens. Set up a regular weekly and daily schedule for cleaning. (CDC guidance for cleaning homes) 
  4. Clean and disinfect your workplace. The employee breakroom and bathroom are great places for virus to be transmitted. Clean and disinfect any areas where employees congregate or routinely touch items such as doorknobs and computer keyboards. Set up daily and weekly cleaning schedules. 
  5. Provide cleaning supplies such as cleaning solutions, buckets, mops, brushes, etc. for cleaning at work and for those living in employer-provided housing. (CDC list of approved antimicrobial cleaning products) 
  6. Review your sick leave policy. The first advice for people who are sick is to stay home except to get medical care. Do you provide paid sick leave for your employees? If you do not, will employees feel financially obligated to come to work even if they are sick? 
  7. Communicate with employees that they should stay home if they are sick. Employees sometimes come to work believing they will face punishment or firing if they miss work. Be sure your employees understand that their health and that of their co-workers’ comes first. Communicate and make a plan to cover for sick employees. CDC provides posters in English and Spanish covering symptoms of novel coronavirus. 
  8. Prepare your disaster contingency plan. What will you do if 50 percent of your employees become sick and unable to work? Are there neighboring farms who might be able to share resources in an emergency? Who will manage for a few weeks if you or another key manager are unable to leave your house or are hospitalized? Cornell’s Extension Disaster Education Network (EDEN) provides community education resources across the entire disaster cycle of preparedness, response, and recovery.
    Penn State also provides farm disaster preparedness resources.
  9. At minimum, share the guidelines from New York state with your employees and family.