COVID 19 Relief Bill – Agriculture and Related Provisions

December 22, 2020

COVID 19 Relief Bill – Agriculture and Related Provisions

Provisions applicable to and supporting cotton industry members include the following:

  • Provide a $20 per planted acre payment to all price-triggered and flat-rate commodities under the CFAP 2 program, which includes both upland and ELS cotton.
  • Cotton textile mills/users will receive a payment of 6 cents per pound for 10 months of 2020 (March to December) based on the mill’s historical average monthly usage of cotton during the January 2017 to December 2019 period.
  • Allows the Secretary of Agriculture to extend the term of 2020 crop marketing loans from 9 months to 12 months.

Paycheck Protection Program (PPP) and EIDL

  • Extends the PPP program and adds $284 billion in funds.

o Allows for new borrowers to apply and certain current borrowers to apply for a “second draw” of funds.

o Eligibility

▪ Employ not more than 300 employees

▪ Have used or will use the full amount of the first PPP if applicable

▪ Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter.

▪ Eligible entities must be businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.

o In general, borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million. Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.

o An eligible entity may only receive one PPP second draw loan.

o For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application.

o Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and nonpayroll costs in order to receive full forgiveness will continue to apply.

o Calculation of Maximum Loan Amount for Farmers and Ranchers under PPP 2

▪ Establishes a specific loan calculation for the first round of Paycheck Protection Program loans for farmers and ranchers who operate as a sole proprietor, independent contractor, self-employed individual, who report income and expenses on a Schedule F, and were in business as of February 15, 2020. These entities may utilize their gross income in 2019 as reported on a Schedule F. Lenders may recalculate loans that have been previously approved to these entities if they would result in a larger loan.

▪ Applies to PPP loans before, on, or after the date of enactment, except for loans that have already been forgiven.

o Repeals section 1110(e)(6) of the CARES Act, which requires PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.

o Provides streamlined forgiveness of loans under $150,000 whereby the borrower signs and submits a one-page certification that requires the borrower to list the loan amount, the number of employees retained, and the estimated total amount of the loan spent on payroll costs

o Allows borrowers the tax deductibility of business expenses that were covered by the forgiven loan.

Omnibus Appropriations Bill – Agriculture/Cotton-related Provisions

  • Additional funding for USDA to complete the WHIP+ payments for 2018 and 2019, including the second 50% of payments due. Also, to fund the Quality Loss Program within WHIP+ — the sign-up period is expected to begin soon.
  • APHIS Cotton Pest Account (Boll Weevil Eradication Program) – $13.597 M ($2 M increase)
  • ARS Cotton Ginning Labs – level funding