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USDA and SBA accepting economic injury disaster loan applications

by PRCA ProRodeo | May 09, 2020

Dear PRCA Members:

We want to inform you that the United States Department of Agriculture (USDA) and the Small Business Administration (SBA) have begun accepting new Economic Injury Disaster Loan and EIDL Advance applications. A conference call between both agencies was conducted on May 4 and funding for agricultural businesses has been approved. The information below provides an overview of the program and we recommend working with your bank’s SBA lending experts.

All members are encouraged to use the link below to research and apply for needed funding to navigate through this difficult time.  We will continue to provide any updates as information becomes available. Applications are now being accepted and are being accepted for a limited time. Please consult with an approved Small Business Administration lender bank.

Economic Injury Disaster Loans

  • Application is available at www.sba.gov/disaster
  • Right now, only agricultural businesses are eligible.
  • For agricultural businesses that submitted an EIDL application through the portal prior to the legislation change, SBA will process those applications – you do not need to re-apply

Eligibility

  • Agricultural businesses include those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (section 18(b) of the Small Business Act)
  • Eligible agricultural businesses with 500 or fewer employees are eligible to apply

How much can you borrow?

  • SBA will determine the amount based on working capital needs
  • Interest rates
    • 3.75% for small businesses
    • 2.75% for nonprofit organizations
  • Terms up to 30 years
  • Payments deferred for 1 year

How can loans be used?

  • Working capital loans
  • Pay fixed debts, payroll, accounts payable, and other bills that could not have been paid had the disaster not occurred.
  • Not intended to replace lost sales/profits or for expansion

What are the collateral requirements?

  • EIDLs over $25,000 require collateral, if available
  • General Security Interest (UCC) in business assets used to secure loans over $25,000
  • SBA will not decline a loan due to lack of collateral

Important Information

  • There is no cost to apply – beware of companies offering to help apply and gather the necessary information for a fee. This is generally not necessary.
  • There is no obligation to take the loan
  • Borrowers with current SBA loans, including existing SBA disaster loans, are eligible for EIDLs – however, they cannot be consolidated.

Information needed

  • Self-certify that business is an agricultural enterprise with not more than 500 employees
  • Business legal name, trade name, EIN or SSN for sole prop, organization type, business activity, number of employees
  • For the 12-month period prior to January 31, 2020
    • Gross Revenues
    • Cost of Goods Sold
    • Cost of Operation, i.e. operating expenses
  • Compensation from other sources (reduces eligible loan amount) – COVID grants, something duplicating working capital.

Advances

  • Must check that you would like to be considered for Advance of up to $10,000 (towards end of application)
  • Provide bank account information where funds will be deposited
  • Amount of Advance is determined by number of employees; $1,000 per employee up to a maximum of $10,000
  • Advance does not have to be paid back, and you do not have to qualify for loan to receive Advance

Questions

  • Can part time farmer participate? Yes.
  • Are those with credit available elsewhere eligible? Credit available elsewhere is waived. Therefore, those with credit available elsewhere are still eligible.
  • Do you need to show a profit from previous year to be eligible? No. SBA will look at credit and operating expenses.
  • Are H-2a employees counted? We are awaiting further clarification from our Government Relations team in regard to this classification.

We will continue to monitor the situation and apprise our members of new developments as they occur.  As always, everyone’s safety and well being is our foremost concern. If you have further questions, please contact PRCA CFO Kirk LaPoure at 719-528-4734 or klapoure@prorodeo.com.

Best regards,

 

Anthony Bartkowski

Director, Athlete Development & Welfare





 
 
 
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