Federal coronavirus aid posed barriers to rural small businesses, lawmakers hear

By: - May 20, 2020 4:00 pm

The Strand Theater in Grinnell, Iowa, is a central business on Main Street. (Photo courtesy of Grinnell Chamber of Commerce)

Rural small businesses have largely missed out on federal coronavirus assistance and many may not survive without another round of aid tailored to small-town and agricultural enterprises, members of a U.S. House small business subcommittee heard Wednesday.

Rep. Abby Finkenauer, D-Iowa, chaired the online forum of the Rural Development, Agriculture, Trade, and Entrepreneurship (RATE) subcommittee.

U.S. Rep. Abby Finkenauer is a Democrat who represents Iowa’s 1st District. (Photo courtesy of Rep. Abby Finkenauer’s office)

Finkenauer said Congress “must remain vigilant to the needs of our rural areas and ensure they are fully included in this economic recovery. Right now, unfortunately, we’re seeing signs that they might not be.”

Finkenauer said the CARES Act, which was signed into law March 27, directed the Small Business Administration to prioritize small business entities in underserved and rural markets. “So that’s great, but according to the Small Business Administration inspector general, this has not actually happened.”

Bill Menner, executive director of the Iowa Rural Development Council, said there were obstacles for small-town businesses to access coronavirus relief funds such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).

Those programs “have had a beneficial impact for some ─ if they knew about it, if they knew how to access it, or if they had a bank willing to work with them on it,” Menner said. He said very small communities that lack a chamber of commerce or economic development group can miss out on assistance programs because of a lack of knowledge.

“There is a dramatic need for resource providers to work hand in hand with leaders and business owners in these small, rural communities,” Menner said.

He noted that nonprofits, especially those organized as 501(c)(4) and 501(c)(6) organizations were ineligible for the paycheck protection program. “And yet they are the groups that are at the forefront of providing support and guidance and technical assistance, some of them have even been forced to close their doors.”

Melissa Moretz, a farmer from Kensett, Iowa, who also works in a bank in Mason City, agreed.

“Our small chamber of commerce in Mason City has seen an $88,000 budget reduction this year because they have had to postpone or cancel programs and events. These folks are small businesses that help all of our other small businesses run and them being eligible for a PPP will bolster our economy in general,” she said.

Moretz also stressed the need for more timely guidance from the Small Business Administration on loan forgiveness requirements. “And a big issue we are seeing now is we have people that are getting close to a forgiveness time frame. And they have just been issued forgiveness guidance. So they’ve been spending this money for six weeks and now they’re unsure if they did it correctly,” she said.

U.S. Rep. John Joyce, R-PA, participates in an online small business subcommittee forum on rural business needs on May 20, 2020. (Screen shot from event livestream)

Rep. John Joyce, R-PA, ranking member of the subcommittee, said rural communities are, in many ways, more vulnerable to the long-term impact of the pandemic. “Dominant industries in rural America tend to produce jobs that can’t be performed from home, which decrease the effectiveness of social distancing and stay-at-home orders,” he said. “Small businesses are also suffering from coronavirus mitigation mandates. Many small businesses across the country and in my own district in Pennsylvania, have seen profits plummet in the wake of this outbreak, sometimes resulting in permanently closing.”

He and other committee members stressed the need for rural broadband expansion.

Dairy farmer Rick Ebert of Burnsville, Pa., president of the Pennsylvania Farm Bureau, said Small Business Administration programs need to be made more farmer-friendly.

“On the surface,  production agriculture remains the same as before COVID-19. Farmers are still milking cows, planting and harvesting, and feeding livestock. But look deeper, and there’s dairy farmers dumping milk, vegetable and fruit farmers plowing under good crops, and livestock producers facing the heart-wrenching decision to euthanize animals,” Ebert said.

“Farmers are trying to find personal protective equipment, keep their workers safe and making business decisions based upon a host of unknowns,” Ebert added. “We are facing enormous pressure, financial, business and mental because of the impact of COVID-19 on the food supply chain.”

For example, he said farmers use different tax forms, and a labor force supported by seasonal workers who are often immigrants. Rent for farmers often includes land, equipment and multiple structures. Guidance to agricultural operations was piecemeal, he said, and there were delays in approval of rural lenders.

“The bottom line is any program that includes farmers needs to take agriculture’s unique nature into account,” Ebert said.

The lawmakers said they would take the comments into consideration as they work on the next round of coronavirus relief.

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