Farmers scramble for loans to cover payroll under CARES Act

Farmers are part of a federal program providing money to help cover payroll during the coronavirus outbreak, but some are worried government glitches will put farmers behind in completing their applications.

Mark Giddings, chief executive officer and founder of Giddings and Associates, accountants and consultants in Fargo, N.D., says farmers who have employees as well as sole proprietorships are should be eligible for loan/grants through the CARES Act, related to the COVID-19 pandemic. Photo taken April 3, 2020, in Fargo, N.D. Mikkel Pates / Agweek

FARGO, N.D. — Farmers are part of the Small Business Administration program providing grants and loans for businesses, but some are worried government glitches will put farmers behind a flood of applicants for a finite amount of funds.

Mark Giddings, chief executive officer and founder of Giddings and Associates, an accounting firm in Fargo, is dealing with the Payroll Protection Program (dubbed the “Triple P”), a $349 billion financial aid program for business owners, operated through the Small Business Administration, not the U.S. Department of Agriculture.

That aid is part of a larger $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act package to fight the economic effects of the COVID-19 virus.

“For the first time ever, farmers have a program that they can actually do with the SBA,” Giddings said. “They’ve never had this before. They were specifically excluded from SBA financing in the past because all of their (federal) financing was done through the USDA.”

The forgivable loans are intended to help employers keep workers on the payroll. Giddings explains that the disaster is so broad that Congress chose to have only one agency to handle all of the funding.


Applications started April 3. Farmers can submit applications through a local lender — banks, credit unions and farm credit banks — but the lender has to be registered as “approved,” which has been frustrating for some.

Flood of work

Howard Olson, senior vice president for government and public affairs at AgCountry Farm Credit Services, whose company deals with clients in North Dakota, Minnesota and Wisconsin, said AgCountry staff has been working feverishly on the program since the president signed it March 27. One problem is that most farm credit banks were not approved SBA lenders to begin with. Some that were have been having problems with changes in passwords, which have prevented loan applications from going through.

“We’re expecting to be part of this,” Olson said. He said AgCountry is still working on getting access to the SBA system and expects to be able to process and deliver the PPP loan program but are uncertain how soon the approval and access might happen. Because of high demand, he’s heard that some community banks are only taking applications from current business customers.

“Our fear is that farmers might get left out on this program. They’re certainly eligible for it,” he said.

Gale Skjoiten, ag and business banking vice president of American Federal Bank in Fargo, said his bank and credit people have been working to establish policies and procedures. He said the bank is working with existing customers first. They are still waiting on clarification regarding sole proprietorships, among other things.

Giddings said some lenders are beefing up their staff and working extra hours but have to deal with the loan application process also. An agent can help the farmer and splits the filing fees with the lender on a predetermined formula.

Farmers can work with an agent such as Giddings to help organize packets for consideration by the bank. His firm normally would be dealing with tax clients, but the tax filing deadline was extended from April 15 to July 15, so the company has time to work on the applications.

“It’s going to be some long days for us, and for the bankers, and for the people applying for these loans,” he said.


“Once you get your application put together and go in and see the bank, they can approve it and fund it the next day,” he said.

The accountant can help make sure the package is complete.

The loan program lasts through June 30 or until all of the funds are gone. Congress funded what they expected to be 50% of those that might apply, on a first-come, first-serve basis.

Giddings said he is suspicious that the demand for the loan and grant program could overwhelm the application system. He said the government only processed 50,000 disaster loans in 2019 and they are anticipating the relief loans will be in the millions.

A forgivable loan

For the first time, farm businesses are dealing with the Small Business Administration, which is doling out help in the COVID-19 criis through the CARES Act. Photo taken April 3, 2020, in Fargo, N.D. Mikkel Pates / Agweek

Giddings’ firm typically serves about 40 farm clients — mostly farmers with payroll — who will be applying for the loan and grant program. About a dozen had applied by April 3. The company serves as an “agent,” sharing the work with banks and other lenders who must register applications.

Farmers can apply either as year-round or seasonal employers.

The four-page application form came out April 2 and forms were revised twice. “It’s not huge, but a lot of accounting-related (payroll) documents have to be attached to it,” he said. It involves income tax records that the government already received.


The program is a forgivable loan. Businesses don’t have to pay it back if they meet certain requirements.

“It requires that they spend the money within an eight-week period after they’re funded. And 75% of it has to be spent on payroll. The other 25% you have the option to spend it on payroll or you can spend it on rent, utilities, and interest on mortgage debt," Giddings said.

Giddings also helps clients organize those payroll records.

Four groups who can apply: 1) employers with fewer than 500 employees, 2) farmers, 3) nonprofit groups, including churches and 4) other nonprofits veterans associations that run businesses.

Farm specific

Farms are unique in that they have a lot of seasonal employees, and a lot of them are hired only in the fall for harvest-related operations.

“There are unique challenges in structuring your application. And there are special rules for seasonal employers. A lot of the farmers are going to want to look at ‘seasonal tests’ to see if they can get a better bang for their buck.”

Many farmers don’t have payroll in the first quarter of the year — January, February and March. “That’s part of the testing period, so they recognize that some businesses are going to be affected by that.”

The program looks at the farm’s average monthly payroll costs for the past 12 months. (Initially, the government was going to use calendar years, but eventually settled on the previous year — April to March, for example.) The loan (grant) is 2.5 times the average monthly payroll.


“Pretty substantial numbers for some farmers, in particular sugar beet growers," Giddings said. He said that in Minnesota alone he’s aware of some 500 beet growers with employees that would allow funding.

“The loan is unsecured and doesn’t require any guarantee,” Giddings said. “The interest rate if you don’t qualify for the forgiveness is 1% (annual rate). It’s very attractive terms all the way around in that regard.”

There are no loan guarantee payments paid to the SBA for the loan. Bank fees to originate the loan are also paid by the U.S. government.

No H-2A workers

No H-2A temporary agricultural workers will apply as part of the qualified payroll base. “You’ve got to make sure that you don’t include that in your application. If you did, you’ll probably be rejected. Or if you did, it’ll be over-funded, and you’ll have to repay the loan.”

Significantly, employers must maintain a similar amount of employees to what they historically did.

“In a lot of industries, that’s what it’s purpose is — to keep people employed. It’s less likely that we’ll have a change in employment in agriculture because of the coronavirus," Giddings said.

The testing date for whether farmers maintained employees is June 30, 2020.

“They may be looking at some issues of about — do we bring on some of our fall help earlier than what we expected, to qualify for the loan forgiveness. . . . We’ll let them know how it works," he said.


Farmers who are self-employed, with earnings from self-employment in the Schedule F or in a Schedule C on their tax forms, do qualify for this loan program.

“They’ll provide you with some assistance," Giddings said. “At this point we’re assisting people in filing applications with what we believe the rules to be.”

“Any farmer that has income from a partnership or a proprietorship — like on a Schedule F — they will qualify, even if they don’t have employees,” he said.

Many farmers that have corporations have W-2s that they pay to themselves. They are employees of the corporation.

“Those incomes are counted as part of the farmer’s qualifying costs,” Giddings said.

Mark Giddings, chief executive officer and founder of Giddings and Associates, accountants and consultants in Fargo, N.D., says farmers can apply for Small Business Administration loan/ Photo taken April 3, 2020, in Fargo, N.D. Mikkel Pates / Agweek

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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