As pork processing plants slow down or shut down and COVID-19 continues to spread, the U.S. pork industry and its individual producers suffer, both financially and emotionally.
While this doesn’t fully offset the economic blow caused by the loss of pork markets, the Small Business Administration is taking steps to help mitigate some of the blow. Kent Bang, Vice President of Swine Lending at Compeer Financial, gave a brief overview of some programs available to pork producers during a National Pork Board webinar.
The Coronavirus Aid Relief and Economic Security Act, better known as the CARES Act, was approved by Congress on March 27, and by April 3, applications were already accepted for the SBA’s Paycheck Protection Program. . “It’s designed to help small businesses and this round, farming is included,” Bang said. “This is designed to primarily help small businesses and continue to pay the payroll.… Available to businesses that have 500 or fewer employees. It extends eligibility for the SBA 7 (a) program to help businesses cover costs related to the payroll, including health care costs, rent, mortgage interest and interest on existing debt and utility payments. ”
The PPP was opened to independent contractors and self-employed workers on April 10. Applications will be accepted until June 30, “but we have seen a strong rush to receive applications and get approval quickly simply because of some concerns about funding limitations,” says Bang.
This program does not require any collateral for the loan or personal guarantees. Loan amounts will be based on 2 ½ times your average monthly salary costs for the period April 1, 2019 to March 31, 2020, limited to $ 10 million in loans. These are two-year loans at 1% interest and no charge, with the possibility of the principal of these loans being forgiven. There is a cap of $ 100,000 per year per person for the combination of salary and benefits.
Loan discount may be granted. “Our expectation would be that most of these loans would be canceled,” he said. Eligibility for pardon is determined by maintaining the payroll and spending the loan money on the specified qualified costs. “As long as you maintain the same number of employees and at least 75% of that base loan rate goes back to the payroll, then you could claim cancellation of that loan. … You have to maintain staff within eight weeks from the time the loan is made and then to maintain the payroll and expenses on that loan for it to be canceled. “
SBA-certified lenders are eligible to offer these loans, and as agriculture is new to the 7 (a) program, lender eligibility has also expanded with the inclusion of the farm credit system. Bang says Compeer Financial made the decision to participate to “support our clients and make it easier for them.” “
Bang suggests speaking with your lender for program details, or visit SBA.gov, or check National Pig Board COVID-19 Resource Page. Log in to follow the full Tuesday NPB webinar “COVID-19 Financial Resources, Current Public Health Situation, and Biosafety Advice. “