News & Resources

NMPF Aims for Paycheck Protection Improvements

July 2, 2020

NMPF made significant strides in June in making the Paycheck Protection Program (PPP) work better for dairy, specifically in improving access for sole proprietor, independent contractor, and self-employed producers.

Created by the CARES Act in March, PPP is a loan program administered by the Small Business Administration designed to help small businesses continue to pay their employees as the nation navigates through the COVID-19 pandemic. Individuals who file a Schedule F tax form – sole proprietor, independent contractor, and self-employed farmers and ranchers – currently must use their farm net income as the amount representing owner compensation when applying for a PPP loan. This creates problems for producers who report a zero or negative net farm income on their taxes because PPP loan amounts are based on payroll expenses. NMPF recognized this as a potential problem when the guidance to use the net farm income figure was issued in April.

Progress on this issue included the June 9 introduction of the bipartisan Paycheck Protection for Producers Act, sponsored by Sens. John Thune (R-SD) and Tammy Baldwin (D-WI), and a companion House measure sponsored by Reps. Ron Kind (D-WI), Glenn ‘GT’ Thompson (R-PA), Anthony Brindisi (D-NY) and John Joyce (R-PA) introduced on June 11th. The legislation would allow sole proprietor, independent contractor, or self-employed farmers and ranchers to use their 2019 gross farm income (capped at $100,000) to determine PPP loan amounts as opposed to the net farm income figure, which by definition is a smaller amount.

NMPF will continue to work with the bill’s sponsors to advance the measure in both chambers. This bill could potentially advance when Congress takes up broader COVID-19 relief legislation, which will likely include additional support for agriculture to build on the Coronavirus Food Assistance Program.