PPP, CFAP, EIDL, WHIP...
These are a few of the programs that came through the COVID-19 crisis of 2020. All the farmers, bankers, consultants, and accountants have been overwhelmed trying to interpret all of these programs. The federal government was still adjusting details of the programs after they were rolled out.
The first program was the PPP. This was intended for employee retention and other expenses. The forgiveness part of this program started eight weeks after the funding was received. This part entailed many more details than the application part. Many banks still had to go through the SBA process so they could approve applications. Time was of the essence because funding was limited. The majority of this process needed to be done electronically, which was something new for many farmers.
Then the EIDL was introduced to our ag community with a lot of unknowns. Questions arose on how collateral is handled after the loan is in place. An example would be a re-advancement on lines of credit.
Then came along the CFAP program through the FSA office. This program included all products of the AG sector including milk, beef, feed, corn, beans, and other commodities. The FSA employees walked most customers through what was qualified and what was not via phone, due to all employees working from home. Variables included farm size, ownership members, whether or not you sold your grain before 2020, livestock inventory, feed/grain inventories, and other items. The money was deposited into farmers' accounts shortly after approval without any obligation to pay this back.
The FSA office also offered the WHIP program which was detailed around the 2018-2019 crop disaster due to inclement weather. This was based on unharvested crop and/or prevent plant acres. This would be calculated by value of crop that could have been harvested. Due to “above average” rainfall, funds have been paid out over the last couple of years.
These programs helped most farms greatly in a time of uncertainty with the world markets. Since all these programs rolled out the milk price has increased in the near months and other commodities have stayed stable. Most farmers just want a fair price for their commodity so they can maintain a profitable business.
While all these programs add new layers of information and complexities that we as agricultural bankers need to understand, one thing remains unchanged: our Wisconsin agricultural bankers will always do our best to help our customers in good times and bad. Stay up to date on all these programs and the latest information by visiting WBA's Coronavirus Resource Page.
Chris Schneider serves as vice president, agricultural banking with Investors Community Bank in Manitowoc. He also is the current Vice Chair of the WBA Agricultural Bankers Section.