CARES Act Includes Aid for Farmers Impacted by COVID-19 Pandemic
By Bill Glazner
The $2.2 trillion CARES Act signed into law on March 27, 2020, to provide emergency aid to individuals and businesses during the COVID-19 crisis includes certain benefits for the agriculture industry that may help Kansas farms withstand the economic impact of the pandemic.
Specifically, the Coronavirus Aid, Relief and Economic Security (CARES) Act includes $9.5 billion in aid designated to support agricultural producers impacted by coronavirus, including producers of specialty crops; producers that supply local food systems such as farmers markets, restaurants, and schools; livestock producers, and dairy farms.
Loans available under the CARES Act can be accessed through banks and credit unions that normally lend to farms and businesses. Loans that are used to keep employees on the payroll through the end of 2020 may be forgiven under the provisions of the Act.
The Act also includes $14 billion more in funding authority under the Commodity Credit Corporation (CCC), allowing the U.S. Department of Agriculture to craft an aid package to farmers who have seen commodity prices crash since the COVID-19 pandemic began. The CCC funds agricultural programs such as Price Loss Coverage and Dairy Margin Coverage, and bolsters commodity and income support programs, natural resources conservation programs, disaster assistance programs, and most recently the Market Facilitation Program.
Overall, the bill provides USDA roughly $48.9 billion to respond to the coronavirus.
The bill includes $15.5 billion for USDA’s Supplemental Nutrition Assistance Program (SNAP), and child nutrition programs will receive another $8.8 billion. Additionally, there are provisions to distribute food aid on Native American reservations.
Additional funding is contained in the Act for various USDA programs that address distance learning, telemedicine, and rural broadband programs.
Nationally, the bill creates a $500 billion direct corporate aid program, in addition to $350 billion in loan programs for small businesses aimed at keeping workers employed during the COVID-19 crisis. The Act also allows for direct payments to most individual taxpayers of “Recovery Rebates” amounting to $1,200 for individuals and $2,400 for married couples within certain income guidelines. Qualified taxpayers will receive an additional $500 for each child age 16 or under.
Direct food and agriculture provisions in the CARES Act total approximately $49 billion, or 2 percent of the $2.2 trillion measure.
In addition to the items above, farmers and farm-related entities have a choice between obtaining a SBA Payroll Protection Program (PPP) loan or receiving a retention credit of 50% of the first $10,000 of employee wages. There are several provisions related to either program that may impact each taxpayer differently. It is important to review these options with your Adams Brown advisor to determine your best course of action. Due to the number of PPP loan applications anticipated, we recommend making these decisions early to ensure the best option is still available if the initial funding of this program runs low. Careful consideration in these uncharted waters will set you up for success in the options that are available to you.
For further information about how the CARES Act may benefit you and your business, and for more guidance on how to apply for the Paycheck Protection Program, check out this article and visit our Coronavirus Resource Center.