QUESTION: Are people who raise gamebirds as a side business eligible for PPP or EIDL?
ANSWER: If the small-scale farmer is a sole proprietor, he/she should go the self-employed independent contractor PPP route, bringing the proper documentation (possibly Form 1040 records of farm income would be the best proof to establish “payroll”). If the small-scale farmer has an incorporated farm business, then a standard PPP (a) would work if the owner’s income is documented on form W2, and (b) might work if the owner’s income is documented in some other way. As time goes by, it is becoming clearer that it may be tough to find a bank willing to process such as small PPP, as the lender’s fee is a percentage of loan size. For a hunting preserve that buys its own birds, consider the $10,000 EIDL grant (does not need to be repaid) as an alternative to PPP, because that application is directly to the SBA, but have business records to show the activity is a real business and not a hobby, and understand that the SBA has to draw a line between businesses and hobbies.
SBA Standard Operating Procedure 50-30-9 (May, 2018) Section 3.3A explains this point: “Businesses Considered as Hobbies: Some endeavors constitute hobbies of the owner even though they are organized as a business. As hobbies, they are not eligible for physical loss or EIDL assistance. If you have reason to believe that an endeavor is in fact a hobby, determine if IRS has reviewed the business status. In the absence of an IRS review, consider whether the business is properly licensed by appropriate authorities, and whether reasonable efforts have been made to operate as a business rather than a hobby.” The reference to IRS review is a reference to Internal Revenue Code provisions that allow business losses but disallow hobby losses – there is an IRS test for distinguishing businesses from hobbies that the SBA considers, although they SBA will also consider other evidence such as businesses licensing.