Current relief programs have limited effect to rural communities, agricultural representatives say

Current federal coronavirus aid cannot sufficiently support rural small businesses, several representatives from the agriculture industry said Wednesday in a virtual forum at the House Committee on Small Business Subcommittee on Rural Development, Agriculture, Trade, and Entrepreneurship.

“On our Main streets, small businesses lead the way… Right now, their futures are in doubt,” said Congresswoman Abby Finkenauer (IA-01) in her opening statement.

“When this crisis is over, we must make sure our small-town pharmacists, town-square restaurants, hardware stores, and florists are still in business and serving their communities,” said Congresswoman Finkenauer.

Ines Polonius, the CEO of Communities Unlimited, said 45% of Americans are persistent in poverty counties, and 60% of them are in color.

Communities Unlimited, a financial fund and rural development hub, has served the rural South by collaborating with the other rural community assistance organizations. During this coronavirus crisis, Polonius and her team at Communities Unlimited provide small businesses with microloans, which are designed to make loans through nonprofit lending organizations to small businesses and certain nonprofit childcare centers.

“In Arkansas, 59% of Child care centers that serve rural areas have closed,” said Polonius. “It would be difficult and impossible for rural employees to return to work or find new jobs without child care.”

“By March 23, 95% of our business borrowers have closed their doors,” said Polonius.

“In the round 1 of Paycheck Protection Program (PPP), 30 of our clients approached to approve for PPP loans,” she added, “Only two were funded, the others heard nothing back.”

On April 3, the Small Business Administration launched the $349 billion Paycheck Protection Program by making loans to small business runners in case of keeping all employees on the payroll. SBA will forgive loans for small businesses that meet certain criteria.

Polonius said the Economic Injury Disaster Loan (EIDL) was forced to be closed.

“Those funds appeared to be exhausted, which did not work well for the rural communities,” she added.

The Economic Injury Disaster Loan that launched on March 30 aims to provide up to $10,000 of relief to small businesses who are suffering a temporary loss of revenue. Since numerous applications jammed into the system of Small Business Administration (SBA), the first round of funding only lasted for two weeks. According to the SBA website, SBA will receive new EIDL applications on a limited basis only to U.S. agricultural businesses.

Melissa Moretz, a farmer at Moretz Farm and commercial portfolio manager at First Citizens Bank, said the PPP loan Forgiveness Guidance is “slow to come.”

She said people who got PPP loans had been spending this money for six weeks and they’re “unsure if they did it correctly.”

Until May 15, the new guidance that implemented more details for PPP loan forgiveness. It had been a long time since this program came out in early March.

Polonius said, “the microlenders won’t be approved until May,” under the new releasing Forgiveness Guidance. “They worry about how much will be left.”

Regarding the ELDL program, Rick Ebert, the president of the Pennsylvania Farm Bureau, said only “2.8% was approved for agriculture.” He criticized “a slow release of information” as well.

“It was pretty easy for me to fill out applications for EIDL and I got approved quickly,” he said. “But many farmers are misunderstanding how to use this fund and whether to pay back.”

“On the PPP side, it’s a nightmare for farmers to fill out the applications and figure out the whole process,” he added.

Ebert said the key change that Small Business Administration should do to help applicants is guiding them on how to use PPP loans.

He also called for strengthening the infrastructures for agricultural enterprises.

“The machinery dealerships have been closed, it’s been tough to get parts shipped by UPS or FedEx now,” he said.

In addition, Moretz said it should be more flexible for small business owners who have received PPP loans to use the funds.

As some small business runners cannot “bring the staff back” and “draw a salary,” Moretz said the funds should be “utilized in a different way,” such as paying for family expenses.

However, the Small Business Administration says, regarding PPP loans that would likely be forgiven, 75% should be used for payroll, and 25% are used for utilities, which is known as the 75/25 rule.

Bill Menner, the executive director of Iowa Rural Development Council, said it is vital to use the Paycheck Protection Program and the Economic Injury Disaster Loan program to keep small businesses on main street for rural vitality, which is why people choose to live in a small town.

“From what I’m hearing, a lot of restaurants could not take advantage of PPP,” he said, “There were limitations.”

Some loans had been blocked or missed out the programs due to “a lack of knowledge,” said Menner.

He said permanent closure of small businesses would cause loss of population in rural areas.

“SBA needs to make sure those applications are adapted to agriculture and the unique nature of businesses,” said Ebert.

“The next package on the next month needs to ensure the rural community has access to it,” he added. “In the first round of the funding was got by larger businesses right away, we never had access to it.”

On the plus side, the Coronavirus Food Assistance Program (CFAP) was launched on Tuesday, intended to support farmers, ranchers and producers.

“These payments will help keep farmers afloat while market demand returns as our nation reopens and recovers,” the U.S. Secretary of Agriculture Sonny Perdue said in an announcement.

The USDA’s Farm Service Agency will accept applications for CFAP as soon as May 26.