INSIGHTi

COVID-19-Related Loan Assistance for
Agricultural Enterprises
Updated May 4, 2021
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136) created the Small
Business Administration’s (SBA’s) Paycheck Protection Program (PPP), expanded eligibility for
Emergency Economic Injury Disaster Loans (EIDLs), and established Emergency EIDL grants to provide
short-term, economic relief to certain small businesses and nonprofits. The CARES Act also made certain
agricultural enterprises eligible for COVID-19 relief.
PPP Loan Terms and Eligibility
PPP loans feature a two- or five-year term at 1% interest; a waiver of the SBA’s up-front loan guarantee
and annual servicing fees; relaxed underwriting requirements; deferred payments for six months (interest
does accrue); and loan forgiveness of up to 100% of the loan’s principal amount under specified
conditions related to the borrower’s retention of employees and wages and the use of the funds for
specified purposes, such as payroll and employee benefits.
PPP loans can be used for payroll costs; group health care benefits during periods of paid leave, and
insurance premiums; employee salaries or similar compensations; payments of interest on any mortgage
obligation (excluding any prepayment of or payment of principal on a mortgage obligation); rent
(including rent under a lease agreement); utilities; interest on any other debt obligations incurred before
February 15, 2020; and refinancing of an SBA EIDL made between January 31, 2020, and April 3, 2020.
Agricultural enterprises, defined in Section 18(b) of the Small Business Act as “small business concerns
engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other
farming and agricultural-related industries,” may apply for a PPP loan if the applicant meets the PPP’s
eligibility requirements:
ï‚· any SBA 7(a) loan guarantee program-eligible small business;
 any business, 501(c)(3) nonprofit organization, 501(c)(19) veteran’s organization, or
tribal business that has not more than 500 employees; or, if applicable,
 the SBA’s size standard in number of employees for their industry.
Congressional Research Service
https://crsreports.congress.gov
IN11357
CRS INSIGHT
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Sole proprietors, independent contractors, and eligible self-employed individuals are also eligible to
receive a covered loan.
SBA PPP guidance notes that, in addition to having 500 or fewer employees, agricultural producers,
farmers, and ranchers are eligible for the PPP if the business fits within its revenue-based industry size
standard, which, for most agricultural enterprises, is average annual receipts of no more than $1 million.
Additionally, they can qualify for PPP loans if their business meets SBA’s “alternative size standard,”
which is currently (1) maximum net worth of not more than $15 million, and (2) the business’s average
net income after federal income taxes (excluding any carry-over losses) for the two full fiscal years before
the date of the application is not more than $5 million.
On May 2, 2021, the SBA reported that 514,453 PPP loans, totaling $9.7 billion (1.24% of the total
amount approved), went to agricultural, forestry, fishing, and hunting businesses.
EIDL and Emergency EIDL Grants Eligibility and Terms
Prior to the CARES Act, agricultural enterprises (other than agricultural cooperatives, aquaculture
enterprises, and eligible nurseries) were ineligible for EIDL because Section 18 of the Small Business Act
prohibited SBA from duplicating the work or activity of other federal departments or agencies, to exclude
agricultural enterprises. Section 18, however, specifies there is no duplication if loan applications are
refused or denied (by another department or agency). The Paycheck Protection Program and Health Care
Enhancement Act (P.L. 116-139) temporarily permitted agricultural enterprises with not more than 500
employees to receive EIDL and Emergency EIDL grants through December 31, 2020. That deadline was
extended to December 31, 2021, by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act (P.L. 116-260). Agricultural enterprises are only eligible for COVID-19-related EIDL.
SBA COVID-19 EIDLs have loan terms of up to 30 years with 3.75% interest for small businesses and
2.75% interest for private nonprofit organizations. The loans may be used for fixed debts (rent, etc.),
payroll, accounts payable, and other expenses that could have been paid had the COVID-19 pandemic not
occurred.
The CARES Act also provided $10 billion for emergency EIDL grants of up to $10,000 to borrowers
adversely affected by the COVID-19 pandemic. The emergency EIDL grant did not have to be repaid,
even if the applicant was subsequently denied an EIDL. Due to high demand, the SBA limited grants to
$1,000 per employee, capped at $10,000.
The SBA stopped accepting new EIDL and Emergency EIDL grant applications on April 16, 2020,
because funding for the programs was nearly exhausted but continued to process EIDL and Emergency
EIDL grant applications that had already been submitted on a first-in, first-out basis. On May 4, 2020,
SBA began processing EIDL and Emergency EIDL grant applications from agricultural businesses that
had submitted applications prior to the legislative change making them eligible. Agricultural businesses
did not need to reapply. After receiving $50 billion in additional EIDL credit subsidy and an additional
$10 billion for Emergency EIDL grants from P.L. 116-139, the SBA resumed the acceptance of new EIDL
and Emergency EIDL grant applications from all eligible borrowers on June 15, 2020. Emergency EIDL
grant funding was exhausted on July 11, 2020.
The American Rescue Plan Act (P.L. 117-2) established a “Targeted EIDL Advance” to provide grants of
up to $10,000 to businesses located in low-income communities, with 300 or fewer employees, and a
revenue reduction of more than 30% during an eight-week period beginning on March 2, 2020, or later.
Businesses and nonprofits that received a previous Emergency EIDL grant in an amount less than $10,000
have first priority. Most agricultural enterprises, however, are ineligible for the Targeted Advance. Rather,
the Targeted EIDL Advance is limited to aquaculture businesses, agricultural cooperatives, and retail
nurseries.

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Author Information

Robert Jay Dilger
Sean Lowry
Senior Specialist in American National Government
Analyst in Public Finance


Bruce R. Lindsay

Specialist in American National Government



Disclaimer
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Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
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IN11357 · VERSION 6 · UPDATED

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