Seed stores, farm or ranch equipment and repair shops or restaurants that have lost revenue because of the recent drought that hurt the farming economy are eligible to receive low-interest federal loans.
The U.S. Small Business Administration is offering loans to help with revenue loss from the drought that began Nov. 1. Small nonfarm businesses or agricultural cooperatives, aquaculture and private nonprofits in 57 Missouri counties including Franklin, St. Louis, St. Charles, Washington and Jefferson can apply for an economic injury disaster loan up to $2 million. Some neighboring counties in Illinois, Iowa and Kansas are also eligible.
The working capital loans can be used to pay outstanding debts and bills or to help business owners make payroll since their revenue may be down, said Garth MacDonald, a U.S. Small Business Administration public information officer.
“It could be because for some reason, farmers are buying less seed at the seed store, or they're not hiring hay cutters because there's no hay growing … those small businesses can get these low-interest loans to help them get through the recovery period,” he said.
The 30-year max loan will help with financial impact, not property damage. Loans are set at a 4% interest rate for businesses and 3.25% for nonprofits.
On March 25, the U.S. Secretary of Agriculture declared the drought an agricultural disaster for the area, which prompted the SBA by law to make economic injury disaster loans available.
Loans are made affordable because many small businesses and private nonprofits often do not have the financial ability to offset the impacts of a disaster without hardship, Francisco Sánchez Jr., the associate administrator for the SBA’s Office of Disaster Recovery and Resilience, said in a statement.
“SBA eligibility covers both the economic impacts on businesses dependent on farmers and ranchers that have suffered agricultural production losses caused by the disaster and businesses directly impacted by the disaster,” Sánchez said.
Interest will not accrue until one year from the date of the loan disbursement. The disaster loan repayment begins 12 months from the first disbursement. To qualify, the SBA will examine current debts and amount of cash flow, and pull business credit reports and tax records to verify reported revenue and income.
MacDonald said this helps the loan officers place owners with loans that they can afford to repay and not hurt them financially.
Self-employed individuals who suffer from agricultural production loss are also urged to apply for monetary assistance.
According to the U.S. Drought Monitor much of Missouri is experiencing abnormally dry conditions or moderate to severe drought conditions. Some parts of the Midwest have been experiencing drought since mid-2020.
If the drought persists and revenues are still low, the SBA will look into increasing loan amounts.
“What we're trying to do is help the community that's surrounding the agriculture area with low-interest federal loans,” MacDonald said. “It's their tax dollars at work, we're helping the community get through a maybe a challenging period.”
