Source: WARD AND SMITH, LLC, 4/16/20
The
Coronavirus has been largely indiscriminate in its assault on the business
community. Agriculture
is no exception. It is true that many "agribusinesses,"
especially those directly involved in food production and distribution, have
been labeled as "essential" or "critical infrastructure."
As a result, these businesses generally enjoy some degree of exemption from the
various Stay at Home orders implemented by
State and local governments in recent weeks. But
these exemptions, which are not all-encompassing, should not distract from the
fact that over the last few years, many sectors of agriculture endured
significant economic hardship. This pandemic only exacerbated the
problems already plaguing many agribusinesses, including trade wars, shaky
commodities markets, and skilled labor shortages. Agriculture, as much as
any industry, is dependent on servicing regular purchasers, such as restaurants
and schools, many of which are not operational. Further disruptions have
come in the form of processing plants shuttered due to workers' infected with
the COVID-19 virus. And the list goes on. Fortunately,
the programs that the government has recently implemented in response to the
pandemic either specifically provide relief for agribusinesses or have been
specifically extended to apply to agribusinesses. The United States
Department of Agriculture ("USDA") has published a helpful matrix entitled the "COVID-19
Federal Rural Resource Guide," which provides links to resources for
various categories of industry participants. In addition, the USDA
regularly publishes answers to frequently asked questions and other updates on
assistance to the industry here, and it makes sense for those in
agribusiness to keep a close eye on them. Here
is a very brief summary of some of the available programs and the recent
developments in them: The Coronavirus Aid, Relief, and Economic Security ("CARES")
ActNumerous
provisions in this legislation apply to agribusinesses, including: =
$9.5 billion in disaster relief funds which the USDA may provide
to specialty crop, dairy, and livestock producers, livestock producers, and
food producers that supply local food systems. =
Boosting the borrowing authority of the Commodity Credit
Corporation, which provides certain bailout payments and other opportunities,
from $14 billion to $30 billion. =
Farm Service Agency ("FSA") Marketing Assistance Loans
("MALS"): These loans now mature at 12 months rather than nine, and
this flexibility is available for most commodities.
Paycheck Protection Program Loans
This
program provides $349 billion in partially forgivable loans designed to help
small businesses continue to pay their employees during this uncertain
time. The Small Business Administration ("SBA") published its
Interim Final Rule on April 2, 2020, and in it, the SBA confirmed that most
agribusinesses are eligible regardless of revenue levels. Any applicants
for the program should confirm their eligibility with legal counsel and the
lender prior to applying. Ed. note: As of this morning,
the SBA has exhausted
the $350 billion allocated for the PPP program. We
understand Congress is likely to take further action to make additional funds
available. We will keep you informed. Farm Service Agency ("FSA") Loans These
loans are still available, and the FSA is still servicing them. In
addition, the loan-making process requirements have been "relaxed,"
which includes extending the time to apply, lessening the required lien
searches, and closing loans even with certain government functions
impaired. Crop InsuranceAuthorized
insurance providers are now allowed to provide additional time for the payment
of premiums and administrative fees. In addition, certain inspection
requirements and other requirements may be waived or modified. Insureds
should contact their insurance carriers about these changes. Agriculture
is today, and has always been, near and dear to our Firm's heart. North
Carolina is where we focus, and agriculture is a critical pillar of our state's
economy. We have worked with agribusinesses of all kinds for over fifty
years, and we have focused that representation into a dedicated practice
group. From farmers and nurseries to processors and storage houses, to
chemical and equipment providers, we are here to help, especially in these
delicate and uncertain times. Please do not hesitate to reach out to one
of our Agribusiness or COVID-19 Response team members if you
have any questions about the material covered in this article or agribusiness
representation in general. -- © 2020 Ward and Smith, P.A. For further information regarding the issues described above, please contact Tyler
J. Russell or Allen
N. Trask, III. This article is not intended to
give, and should not be relied upon for, legal advice in any particular
circumstance or fact situation. No action should be taken in reliance upon the
information contained in this article without obtaining the advice of an
attorney. We are your established legal
network with offices in Asheville, Greenville, New Bern, Raleigh, and Wilmington, NC.
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