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SBA Issues Guidance for PPP Loans for Farmers

CPAs & Business Consultants


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The new Consolidated Appropriations Act (CAA) permits certain smaller businesses who received a PPP loan to take out a Second Draw PPP loan. The PPP funds are also available to first-time applicants. The applications for the second round of Paycheck Protection Program (PPP) loans have opened.

The SBA issued two new Interim Final Rules on January 7, 2021, that finally address PPP loans for farmers.

  • A farmer who filed Schedule F and showed less than $100,000 of net profits in 2019, and had no employees, was originally limited to a PPP loan based on net profits. The new law changed the calculation retroactively to be based on gross income instead.
  • This means that a farmer may be eligible for an increased loan amount for Round 1. The SBA could recalculate and provide the additional loan amount to the farm through the lending institution. The increase applies only to PPP loans that have not been forgiven.
  • A farmer would potentially be eligible for a larger loan amount in Round 2 of PPP based on these new criteria.
  • The calculation for the increased loan eligibility becomes more complicated if the Schedule F farmer had W-2 employees. We can help with those calculations if that is your situation. 

We have not received clarification whether those who had a net loss and therefore were ineligible for Round 1 could now apply for Round 2; currently, it appears you had to apply and receive a loan during the first round.

Initially, only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly after that.

Read more about the loan terms, the simplified application, loan forgiveness and expense deductibility for the second draw PPP loan. Also, see the Small Business Administration’s Paycheck Protection Program page for loan applications and additional information.

We encourage you to apply early because we anticipate funds will run out. The last day to apply will be March 31, 2021. Please contact your SBA lender with questions. If you do not have an SBA lender, you may search for one on this list.

Reach out to your Yeo & Yeo professional if you need help preparing the application or with loan forgiveness.

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