ODFA COVID-19 Resources

Posted by ODI Secretary | On: Apr 07 2020

Oregon Producers,

Thanks to our friends at the Idaho Dairymen’s Association for sharing the original information below. Content also came from various agricultural lenders and a CPA firm.

There are a lot of questions about the CARES Act and how it will benefit dairy producers. Information continues to evolve. In the haste to get information to you, we apologize if this communication contains errors or any misleading information. The best advice we can share is to contact your lender today.

We understand the PPP applications are now open in Oregon. We also understand the application is short and won’t go through normal channels, so can be approved quickly. Make sure you are at the front of the line when funds are distributed.

Typically agricultural producers are exempted from qualifying for Small Business Administration (SBA) loans and benefits, as USDA has programs specific to agriculture for our use. The CARES Act, which was the latest round of COVID relief legislation passed recently, lifted that exemption and provides benefits to ag producers through the SBA. Guidance for ag applications is still being worked on, but we encourage you to contact your lender and begin a conversation to learn about qualifications and what documentation you will need to complete a typical SBA loan application.

There are significant benefits through the loan forgiveness offered for the eight weeks following the closing of the loan, including operating costs associated with payroll, mortgage interest, rent and utilities.

‘CARES’ Act Benefits for Dairy Producers

The CARES Act signed into law by President Trump on Friday, March 27 includes several potential benefits for dairy producers. The bill adds several billion dollars to federal nutrition assistance programs that consumers can use to purchase milk and dairy products among other food items. The bill also authorizes $9.5 billion for assistance to livestock and dairy producers, specialty crop growers and farmers who supply local food systems.

The expectation is that this money will largely be used for direct payments to affected producers but USDA has not yet issued guidance for release of these funds.

For the first time, farm operators are now eligible to apply for loans through the U.S. SBA. The bill includes a loan program for employers that is aimed at keeping as many workers on the job, and getting paid, as possible while the country’s economy struggles as a result of the effort to contain the coronavirus. An overview of details for two programs include:

‘Paycheck Protection Program’ (PPP)

  • A U.S. Treasury Department program administered by the SBA.
  • The usual SBA income limits for small business do not apply.
  • The applicant must certify that business revenue has declined due to COVID-19.
  • The loan can be for 2.5x the average monthly payroll for the business up to $10 million.
  • The funds can be used for operating expenses, including payroll, continuation of group health care benefits, lease payments, mortgage interest, business interest, utilities and rent.
  • Loan forgiveness is available for amounts spent in the eight weeks after loan closing on payroll, mortgage interest, rent and utilities.
  • Employee numbers and payroll amount may not have been reduced from February 15 through June 30, 2020. Quick rehiring is allowed.
  • Forgiven principal amounts are not included in employer gross income.
  • There are waivers of some usual loan requirements such as fees, certification that no other credit is available, personal guarantees and collateral.
  • Funds not forgiven may be financed for up to 10 years at a maximum of 4% interest. 

‘Economic Injury Disaster Loans’ (EIDL)

  • At this time, farmers and agricultural businesses are ineligible for this program. It’s being addressed at the federal level.
  • SBA income limits do not apply.
  • Can be up to 30-year loans used to cover operating expenses and working capital needs.
  • Can cover payroll, rent, mortgage interest, costs due to supply interruptions, additional outlays for employee sick leave due to COVID-19.
  • Loan amounts are decided on a case-by-case basis up to a max of $2 million.
  • Interest rate of 3.75% for small business.
  • A personal guarantee is required for loans in excess of $200,000.
  • There is no requirement that other credit not be available.
  • EIDL loans are not eligible for debt forgiveness.
  • Allows for emergency grants of up to $10,000 available in as few as three days.

ODFA continues to post new information to our COVID-19 page as new information and resources are made available. As always, you can contact us by phone or email.

Tami Kerr, Executive Director
Tammy Dennee, Legislative Director
ODFA Office (971) 599-5269