The Economic Aid Act Signed into law on December 27, 2020 not only introduced a Second Round of PPP funding, but changed the calculation for farmers and ranchers with no employees and who file Schedule F on their Form 1040.  Instead of requiring the use of net profits (schedule F, line 34) for the application process, you can now use gross income (schedule F, line 9).  This allows a producer who possibly had net loss on schedule F to now qualify using gross income. 

Line 9 of the Schedule F is “gross income” for this purpose and includes several items: sales of livestock and other resale items less the cost of goods sold, sales of livestock, produce, grains, and other products you raised, cooperative distributions, agricultural program payments, crop insurance proceeds, custom hire and other income.

If the Farmer/Rancher has no employees, line 9 of the schedule F is all that is needed to see the qualifying amount.  If that line is greater than $100,000 then the Farmer/Rancher will qualify for the full $20,833 allowed maximum PPP loan based on earnings calculated as ($100,000 / 12 months * 2.5 months = $20,833).  If it is less than $100,000, then the maximum loan amount is reduced accordingly.

These rules now apply for both the First PPP round in 2020 and the Second Round of PPP loan which is now available.  You can request an amended increased First Round 2020 PPP loan based on these new rules.  Consult with your banker to obtain your additional funds.

If you did apply and receive the First Round of the PPP program in 2020, you can now apply for a PPP loan if (and only if) you had at least one calendar quarter in 2020 where “gross Receipts” are at least 25% less than the same calendar quarter of 2019.  If you did not apply for the First Round, you can apply now for PPP without having to show the revenue decline.

Application of the new rules for an agricultural producer with employees is more complicated; however, opportunities for additional PPP funding are still available.

Please contact your KTLLP advisor to discuss any questions or concerns.