Ag Policy Blog

Senators Push to Change PPP Loan Approvals for Farmers in Partnerships

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
Connect with Chris:
Bills introduced in Congress would change how the Small Business Administration treats farmers who use partnerships in their operations, and allow them to use gross income on their application forms for Paycheck Protection Program loans. (DTN file photo)

A bipartisan group of senators on Tuesday introduced a bill that would provide more aid through the SBA's Paycheck Protection Program to farmers and ranchers who are in farming partnerships.

The "PPP Flexibility for Farmers, Ranchers and the Self-Employed Act" would specifically change language the Small Business Administration operates under to allow farmers in partnerships with gross income from self-employment to be eligible to use an alternative gross revenue loan calculation formula.

Farmers in these partnerships would be allowed to use gross income instead of net income from the partnership. The change would allow farmers to have their loans recalculated based on higher gross revenue.

The new definition would state that "gross revenue for members of partnerships" is effectively the person's share of the net earnings from self-employment in the partnership.

If passed, this change would also be retroactive to the passage of the CARES Act on March 27, 2020. This would allow these farmers in partnerships to apply for PPP loans, or increase the amount of approved loans, going back to last year. Borrowers would ask SBA to recalculate the amount covered under the loan and receive a payment.

The bill was introduced by Sen. Ben Cardin, D-Md., who chairs the U.S. Senate Committee on Small Business, as well as Sens. James Lankford, R-Okla., Susan Collins, R-Maine, Angus King, I-Maine, Tammy Baldwin, D-Wis., Rob Portman, R-Ohio, and Roger Marshall, R-Kan.

Marshall also had signed on to a similar bill introduced in March along with Sens. John Hickenlooper, D-Colo., and Joni Ernst, R-Iowa.

The House also has had multiple versions of the same bill introduced as well. Reps. Abigail Spanberger, D-Va., Cindy Axne, D-Iowa, and Ashley Hinson R-Iowa, introduced one version of the bill. House Small Business Committee Chair Nydia Velazquez, D-NY, introduced a similar bill.

The Paycheck Protection Program is on its third batch of funds and loan eligibility. The deadline for applications is May 31. PPP loans are forgivable as long as 60% or more of the proceeds are spent on approved expenses, which includes self-employment compensation for sole proprietorships and single-owner limited liability corporations (LLCs) that file income taxes based on a Schedule F.

SBA had issued guidance in March stating how businesses can calculate maximum loan amounts. In doing so, SBA stuck with its position that only self-employed farmers and ranchers who file a 1040 Schedule F with their tax returns can use gross income to determine the loan amount. A farmer or rancher who is a single member of an LLC or a qualified joint venture, as defined by the IRS, and files a Schedule F can use gross income to determine their loan amount. Multiple farmers in a partnership, though, must use net income from the partnership on the application, and they have a longer list of reporting details to provide on their application.

In February, SBA boosted funding eligibility for sole proprietors such as farmers with a change in the loan formula. Businesses, including those in agriculture, can apply for PPP loans if they have 500 or fewer employees. The first draw of a PPP loan can go as high as $10 million, though the overall average loan size is $68,000.…

More information on SBA loans can be found at…

Chris Clayton can be reached at

Follow him on Twitter @ChrisClaytonDTN


To comment, please Log In or Join our Community .