Now the industry faces the added, colossal challenge of the COVID-19 crisis, which is having a particularly hard hit on farmers and startups.
The good news is, the fact that hemp is federally legal means that there is available financial relief and support for the industry.
Legal hemp businesses are eligible for Small Business Administration loans, federal stimulus funds, federal and state agricultural grant programs and tax relief, among other benefits.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provides relief for small businesses affected by the COVID-19 crisis. But SBA policy precludes marijuana and ancillary businesses from eligibility.
SBA loan programs include the:
cPaycheck Protection Program (which quickly exhausted funds but was replenished by Congress last week by $321 billion).
– Economic Injury Disaster Loans (EIDL) and advances.
– The latest stimulus bill included clarity on the eligibility of agricultural enterprises for EIDL funds, specifying that small farms were eligible for the program.
EIDL loans are up to $2 million and can be used for payroll, fixed debts and other bills.
An EIDL advance provides up to $10,000 without repayment if used for:
– Paid sick leave.
Maintaining payroll to retain employees.
– – Meeting increased costs as a result of interrupted supply chains, rent or mortgage payments or to repay obligations that can’t be met because of revenue losses.
– Payment Protection Program loans allow borrowers to cover payroll, rent payment and mortgage interest as well as other costs. The loans, which may be forgiven, are processed on a first-come, first-served basis, and even though this latest round of stimulus funding is expected to be expended quickly, future funding of this program is likely.
SBA Express Bridge loans provide expedited loans up to up to $25,000 for disaster-related purposes. These loans are processed quickly and can be used to bridge the gap while applying for EIDL or PPP.
Express Bridge loans are repaid in full or in part by proceeds of the EIDL or the PPP loan, if received. For the COVID-19 Emergency Declaration, EBL loans can be approved through March 13, 2021.
Help for cultivators
In addition to SBA programs, the CARES Act appropriated relief funds specifically to the agricultural sector, including:
– $9.5 billion to the U.S. Department of Agriculture to provide financial support to farmers and ranchers.
– $14 billion to the Commodity Credit Corp. (CCC), which will allow the USDA to develop new support programs to help agricultural businesses.
– Extensions on repayment of commodity marketing assistance loans.
– Last week, USDA announced a $19 billion agricultural relief package, providing direct payments to farmers based on actual losses.
The package includes:
– $9.6 billion for the livestock industry.
– $3.9 billion to row crop producers.
– $2.1 billion to specialty crop producers.
– $500 million for other crops.
Although there is some uncertainty about the eligibility of hemp businesses for these relief funds, Agriculture Secretary Sonny Perdue confirmed that the $500 million for “other crops” includes hemp.
There is certainly still work to do to ensure legal hemp businesses benefit from these programs, including designation of certain hemp as a specialty crop and ensuring FSA loan eligibility of commercial producers in states operating under the 2014 Farm Bill programs.
The industry is working hard to resolve these issues.
There are also federal, state, and local grant programs available to hemp farmers outside of emergency relief-funds.
Non-emergency Farm Service Agency loans that may be available to hemp businesses include (but are not limited to):
– Direct operating loans.
– Direct farm ownership loans.
– USDA Organic Certification Cost Share Programs.
– Farm storage facility loans.
– Specialty loans for minority and women farmers, beginning farms, native American tribes and others.
The USDA has helpful resources for businesses to identify available programs and assess eligibility, including a resource guide matrix and a “Farm Loan Discovery Tool.”