RED OAK, Iowa—U.S. Senator Joni Ernst (R-Iowa), a senior Republican on the Senate Small Business Committee, is part of a bipartisan effort to ensure Iowa farmers have access to the Paycheck Protection Program (PPP). The bill would ensure farmers and ranchers categorized as a partnership – many of which are small family farms – are able to use gross income when applying for PPP funds. Without this legislation, farmers and ranchers are forced to use net income, which is often low or negative because of the amount of depreciation that farmers claim on equipment. It would also allow Schedule F farmers who had loans forgiven in 2020 to recalculate their loans based on gross income.
“Despite enormous challenges, Iowa’s farmers have continued to feed and fuel the world during COVID-19. And while some have been able to benefit from the Paycheck Protection Program, many of them—including partnerships and those who already had loans forgiven—have been unable to benefit from improvements made in the December COVID relief bill that give farmers access to more generous loans. In a recent Small Business Committee hearing, I called for changes to be made so these folks can benefit from a higher loan amount, and this bill makes that fix to ensure Iowa’s farmers are getting the support they deserve,” said Senator Ernst, ranking member of the Senate Agriculture Subcommittee on Rural Development and Energy.
In December, Congress made changes to allow farmers to use gross income in calculating their PPP Loan. Before it passed, the payments were based on farmers' net income, which is income after deductions and expenses. Unfortunately, certain farm and ranch partnerships were left out of changes made to the program in December. While Congress intended to include partnerships, the SBA, interpreting the statute that was passed, did not.
In addition, those farmers and ranchers who already had their PPP loans forgiven were unable to recalculate their loan based on gross income. At a recent Senate Small Business Committee hearing, Ernst highlighted this problem, and called on Congress to allow all Schedule C and Schedule F filers – including those who have already had their loan forgiven like many Iowa farmers – to recalculate using gross income.