SBA Opens Up Loan for Farmers

For a Limited Time, Farmers Can Apply for Economic Injury Disaster Loans and Grants

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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OMAHA (DTN) -- Farmers who have been waiting for the Small Business Administration to open up more loan funding need to take action quickly to get their loans in line.

SBA on Monday announced it would open Emergency Economic Injury Disaster Loan (EIDL) programs for farmers. SBA will essentially "reopen" the loan portal for those EIDL loans, the agency stated.

The EIDL has been a challenging loan program for farmers to access since the COVID-19 pandemic began and aid was approved by Congress. In the first batch of funding in early April, SBA would not allow farmers to apply for EIDL loans. Then in the latter part of April, Congress approved a new round of small-business funding and specifically detailed that farmers are allowed to apply. Yet, up until Monday SBA was stating there was such a backlog of EIDL loan applications that it was not accepting new applications.

EIDL loans go directly through SBA and they provide individual grants to small businesses for up to $10,000. But the EIDL loans can go as high as $2 million for small businesses. The EIDL loans are not forgiven, but EIDL allows low-interest loans (3.75%) for up to 30 years. And the loans are not as limited in what they can be used for compared to SBA's other emergency loan aid, the Paycheck Protection Program (PPP) loans. The EIDL also does not have the collateral demands that small businesses and farmers might face from commercial lenders.

USDA stated to DTN on Monday that farmers do not have to worry about SBA loans affecting farm program eligibility. In a brief comment, USDA stated, "Participation in SBA's PPP or EIDL program does not impact producer eligibility for USDA's forthcoming CFAP (Coronavirus Food Assistance Program)."

SBA Administrator Jovita Carranza noted in a news release that for 30 years SBA has been prohibited from providing disaster assistance to agricultural businesses, but the legislation passed by Congress opened up those loan programs. "These low-interest, long-term loans will help keep agricultural businesses viable while bringing stability to the nation's vitally important food supply chains," Carranza said.

Since early April, farmers have faced a lot of confusion with SBA over the Paycheck Protection Program (PPP) and the EIDL loans. SBA took weeks to provide guidance that farmers could use a Schedule F to apply for programs instead of a Schedule C, for instance. PPP loans go through private lenders, but EIDL loans and grants go directly through SBA.

SBA will now take new EIDL applications "on a limited basis only" to provide relief for farmers.

For agricultural businesses that submitted an EIDL loan application through the streamlined application portal prior to the legislative change, SBA will move forward and process these applications without the need for re-applying. All other EIDL loan applications that were submitted before the portal stopped accepting new applications on April 15 will be processed on a first-in, first-out basis.

Sen. John Hoeven, R-N.D., chairman of the Senate Agricultural Appropriations Committee, said farmers and ranchers with fewer than 500 employees are now eligible to apply for the EIDL grants and loans.

"Access to these loans and the emergency loan advance is another important support for our farmers and ranchers, who continue to provide us with the food we need as we combat this pandemic," Hoeven said. "That's why we worked to secure additional funding as well as eligibility for agriculture businesses. We appreciate the SBA for working with us to implement our legislation in a timely way and for prioritizing support for producers."

Information and application information for EIDL loans and grants can be found at…

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Chris Clayton