Agricultural Employers Are Now Eligible for Economic Injury Disaster Loans and Emergency Grants

Apr 24, 2020   Print PDF

By Michelle D. Mendoza | Related Practices: Agriculture and Employment

Small businesses have been significantly impacted by measures to reduce the spread of COVID-19. The CARES Act (the “Act”) was signed into law last month and aimed to offer support for the economy, public health, state and local governments, individuals, and businesses. To support small businesses, the Act expanded two existing loan programs administered by the Small Business Administration (“SBA”). The Paycheck Protection Program (“PPP”) was highly publicized and provides payroll assistance to small businesses through federally guaranteed loans. In addition to PPP, the Act also increased the scope of Economic Injury Disaster Loans (“EIDL”) to provide economic relief to small businesses affected by a disaster.

dirt road through middle of vineyard

What are EIDLs?

The SBA is authorized to make EIDLs to small businesses, private nonprofits, or small agricultural cooperatives located in an area affected by a disaster and whose business has suffered a substantial economic injury as a result of the disaster. The Act eased the lending criteria for EIDLs and broadened the scope of eligible applicants to allow businesses who had not been in operation for a full year prior to the disaster to apply, so long as they were in operation as of January 31, 2020. In addition to easing lending requirements, the Act also permits applicants to request an advance of funds up to $10,000 be funded within three days of application. The advance may be used to provide paid sick leave to employees, maintain payroll, meet increased costs to obtain materials due to interrupted supply chains, make rent or mortgage payments, and repay obligations. Any applicant who receives an advance, but is ultimately denied a loan, is not required to repay the advance.

Are agricultural employers eligible for EIDLs?

Yes. In the past, agricultural employers were not eligible for EIDLs. Instead, agricultural employers were directed to utilize disaster relief resources from the U.S. Department of Agriculture (“USDA”). There was immediate concern that excluding agricultural employers from EIDLs during COVID-19 would prevent them from receiving the assistance they needed, however. To rectify this, the House introduced a bill proposing to increase funding to $20 billion and to include agricultural employers, which includes all employers engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries, as businesses eligible to apply for EIDLs. The bill was passed by Congress and signed into law today. Agricultural employers may now apply for EIDLs.

With the current economic uncertainty, it’s important to consider all government assistance available to your small business. If you are interested in learning more about EIDLs, please visit https://www.sba.gov/funding-programs/disaster-assistance for more information.

If you have EIDL-related questions, please contact Michelle Mendoza or Dustin Yeager.