MT. JULIET, Tenn. (DTN) -- A coalition of 35 agriculture groups is urging Congress to work with the Small Business Administration (SBA) to ensure farm partnerships and limited liability corporations have the same access to the Paycheck Protection Program (PPP) that's granted to sole proprietors.
The letter -- which was signed by all major commodity and farm organizations as well as the Farm Credit Council, cooperatives, banks and other agribusinesses -- argues that excluding farm partnerships and LLCs produces disparate results based solely on farm structure, not need, and misinterprets Congress' intent.
"As you know, farming and ranching are capital-intensive operations often operating at a loss and with owners who frequently do not work for wages. When Congress designed the original PPP program, it did not recognize these special circumstances facing those working in agriculture. As a result, many farmers and ranchers did not qualify for PPP assistance," the letter states.
When Congress updated the PPP, it created a special provision for calculating farmers' and ranchers' eligibility, allowing them to use gross income instead of net income in calculations. For more on this change, please read "Farmers Could See Bigger Payments Under New PPP Rules" here: https://www.dtnpf.com/…
"In the months since Congress passed the Economic Aid Act, however, the Small Business Administration has interpreted this language to exclude farm and ranch operations structured as partnerships and limited liability corporations," the letter states. "We believe this interpretation is in error and is preventing many farm and ranch families from participating in the PPP."
Congressional leaders agree. Five lawmakers wrote a letter to leadership at the SBA and Treasury Department saying they "anticipated that the SBA would apply the same broad interpretation of sole proprietorship, independent contractor, or self-employed individual" that SBA applied in the first round of PPP to its new rules for farmers. For more details, please read "Lawmakers Say They Intended for PPP Changes to Apply to Partnerships, Call for Change" here: https://www.dtnpf.com/….
By excluding partnerships from the gross income calculation, farmers and ranchers that run their business through a partnership of LLC are limited to payroll costs they pay to non-owner employees unless they have net income from operations. The coalition's letter gives a detailed breakdown of how the situations differ. You can find the complete text of the letter in the Minding Ag's Business blog, here: https://www.dtnpf.com/….
With time running short to apply for the program -- the deadline is March 31 -- the coalition urges Congress to include a clarification in the next stimulus bill.
"Further, given that Congress will likely not pass the next stimulus bill until March, we ask that you consider extending the current March 31 enrollment deadline to allow eligible farmer and rancher partnerships and LLCs time to enroll in this program."
Katie Dehlinger can be reached at firstname.lastname@example.org
Follow her on Twitter at @KatieD_DTN
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