What’s in the CARES Act relief bill for hemp businesses?

Last Friday President Trump signed the CARES Act, a $2.2 trillion dollar stimulus and disaster relief package, that makes available funding to help deal with the unprecedented economic impact resulting from the COVID-19 virus.

The bill includes a number of provisions to help farmers and hemp businesses as long as they are in compliance with their state and federal laws.

  • Paycheck Protection Program – $349 billion
  • Expanded Economic Injury Disaster Loans and Emergency Grants – $10 billion
  • USDA Corona Virus Response – $9.5 billion
  • Commodity Credit Corp. (USDA) – $14 billion

For businesses, the best places to start is to contact your local Small Business Development Center as they can help you to understand and navigate the options available to you.

Below are some of the top opportunities for hemp businesses and farmers. This is likely the not the last bill to address the financial impact of the virus. We are currently advocating with USDA and Congressional allies for more inclusion of hemp farmers within the disaster assistance programs.

Farmer Assistance
Funding was provided to USDA for disaster assistance in the CARES Act but Secretary Perdue has not yet announced how the funding will be provided to farmers. We recommend you follow the USDA corona virus disaster relief page and we will continue to update you as we learn more: https://www.usda.gov/coronavirus

The U.S. State Department revised its restrictions on the processing of visa applications submitted by farm workers in Mexico after hearing concerns that the restrictions would lead to a farm worker shortage in the U.S. Consular officers can now waive the visa interview requirement for eligible first-time and returning H-2A and H-2B applicants, making more workers in the H-2 program available while prioritizing public health.

The CARES Act Expanded Economic Injury Disaster Loans (EIDL) do make farmer coops of up to 500 members eligible but farmers are not included at this time. We are working on a coalition letter to the SBA urging them to include farmers as eligible for EIDL loans. More details are here.

Small Business Assistance
The Paycheck Protection Program authorizes up to $349 billion in forgivable loans and is available to businesses – including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees. The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made AND you maintain compensation levels. You should be able to apply through any existing SBA lender (bank) starting this Friday April 3, 2020. More details are here.

Expanded Economic Injury Disaster Loans (EIDL): Small businesses may apply directly to the federal Small Business Administration to receive an economic injury disaster grant of up to $10,000 that does not need to be paid back. The money is supposed to be paid out to business owners within three days of their application’s submission but we expect huge demand and challenges for SBA to implement it so plan on it taking longer. It can be used to maintain payroll, cover paid sick leave and service other debt obligations. More details are here.

Employee Retention Credit For Employers Subject to Closure Due to COVID-19: To help employers (including tax-exempt organizations) affected by the COVID-19 pandemic, the CARES Act provides for an employer federal tax credit against the Social Security portion of payroll tax that the employer pays. The act applies to wages paid from March 13, 2020, through December 31, 2020, and is available to qualified employers, which are employers who carried on a trade or business during 2020 and whose (1) operations were fully or partially suspended due to a COVID-19-related shut-down order or (2) gross receipts declined by more than 50% compared to the same quarter in the prior year. The amount of the tax credit is equal to 50% of the first $10,000 in qualified wages (including health benefits) paid to each employee, up to a maximum tax credit of $5,000 per employee. For eligible employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit. Qualified wages do not include sick leave wages or family leave wages paid pursuant to the Families First Coronavirus Response Act (H.R. 6201). We recommend you contact your CPA or financial advisor to learn if you qualify for the Employee Retention Credit.