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NCFC Helps Small Co-ops Navigate Paycheck Protection Program

Press Releases
Washington, D.C. (May 11, 2020)—The National Council of Farmer Cooperatives (NCFC) has developed a set of best practices for small farmer co-ops to follow in demonstrating their need for funding through the Small Business Administration’s Paycheck Protection Program. NCFC developed the recommendation with the assistance of outside attorneys who work closely with members of NCFC’s Legal, Tax & Accounting Committee.

The Paycheck Protection Program was launched on April 3 with few parameters regarding eligibility.  Subsequently, the SBA announced it will audit all loans of $2 million and above and may audit loans under $2 million.  According the SBA, borrowers must be able to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers that applied for a PPP loan prior to April 23, 2020, may repay the loan in full by Thursday, May 14, if they believe they could not make such certification in good faith. 

“It is unfortunate that SBA has compounded the angst and uncertainty across rural America by adding requirements to the program after it was rolled out and after many co-ops applied,” said Chuck Conner, president and CEO of NCFC. “Regulations that are meant to keep professional basketball teams or a nationwide chain of high-end steakhouses from using the program should not impact small co-ops trying to navigate an economic crisis and a pandemic that are stressing the agriculture value chain to the breaking point. We hope that the resources we are providing can guide these co-ops towards making the right decision for their employees and their farmer-owners.” Among the recommendations to co-ops are:
  • Conduct a financial analysis based on information available today looking at the base case, best case and worst-case scenario both with and without PPP funds;
  • In conducting the analysis, consider that there may be a “U-shaped” or “L-shaped” recovery and its impact on the co-op; consider economic impacts on suppliers and customers and their ability to pay on a timely basis; and consider the potential for a COVID-19 outbreak at a co-op facility and the resulting impacts on continued operations;
  • Develop a memo based on this analysis and distribute to the board for discussion; adopt a resolution accepting the memo as a record of current facts and circumstances.

About NCFC

Since 1929, NCFC has been the voice of America’s farmer cooperatives.  Our members are regional and national farmer cooperatives, which are in turn composed of nearly 2,000 local farmer cooperatives across the country.  NCFC members also include 26 state and regional councils of cooperatives.  Farmer cooperatives allow individual farmers the ability to own and lead organizations that are essential for continued competitiveness in both the domestic and international markets. America’s farmer-owned cooperatives provide a comprehensive array of services for their members.  These diverse organizations handle, process and market virtually every type of agricultural commodity.  They also provide farmers with access to infrastructure necessary to manufacture, distribute and sell a variety of farm inputs.  Additionally, they provide credit and related financial services, including export financing
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