Horse business incomes affected by COVID-19

Extension Horses, a group of professionals from different Land Grant Universities, hosted a webinar April 8 to detail options for employees and owners in the equine industry who have lost their jobs, been furloughed or are barn or business owners.

Ashley Harkin, director of the United Horse Coalition, said her group is an alliance of many organizations within the equine industry who come together to educate the horse industry about the issues facing horses who are at risk or in transition. The member base is primarily made up of industry partners, rescues, sanctuaries, state horse councils, breed associations, and various other organizations throughout the industry.

“We initially were formed during the Unwanted Horse Summit, which took place at the American Horse Council’s Annual Meeting back in 2005,” she said. “We’re very diverse coalition, which is great because it means that we have a wide range of knowledge, base and experience.”

Through the collaboration, UHC can promote education options for owners who are facing hardships.

“We do this by being sort of a warehouse of information and important resources,” Harkin said. “Not only for current owners but prospective owners as well. This includes breeders, sellers, various horse organizations.”

UHC likes to promote responsible horse ownership, and all it entails because by having a responsible owner, a horse is less likely to end up in a situation where it becomes at risk.

“So if we can provide you with these tools and resources, we can further our collective mission of keeping these horses safe at home with their owners,” Harkin said.

The term “at-risk” means primarily an equine that has an “increased possibility of experiencing a situation of neglect, abuse or generally, poor welfare,” she said.

“In the industry, we’ve started to move away from using the term unwanted which sort of holds up a negative connotation when connected to a horse,” Harkin said.

One that is “in transition” is one that’s moving from one home, vocation or opportunity, or owner to the next.

“As we are aware, throughout their lifetime most horses will have multiple homes and different owners,” Harkin said. “That’s just a realistic expectation. Often these horses find themselves in transition due to no fault of their own.”

Many of these changes in a horse’s life are the result of a change in the owner’s circumstances. Harkin offered tips on how to search for resources on the coalition’s website, unitedhorsecoalition.org/resource-database. Their resource database is currently under construction and will be updated as information becomes available.

She said resources like this are important, and the group had been working on the database for the past year, even before the COVID-19 pandemic hit.

“The resource database itself was created to help current horse owners, perspective horse owners, rescue sanctuaries—really the equine industry as a whole,” Harkin said. “We consider a resource to be anything that can be used for the betterment of horses or their owners who are at risk.”

They have resources that include things like horse rescues and sanctuaries; or, for the horses in need of placement, things like direct placement organizations; feed assistance; temporary foster homes; castration assistance; veterinary funding; euthanasia programs and clinics; behavior modification assistance and law enforcement.

“Our ultimate goal is to try and utilize these tools and resources to keep horses with their owners as much as possible,” she said. “Maybe such as the case now, the financial situation is only a temporary one and if we can help owners in the short term, they will be able to keep their horse from having to be rehomed.”

UHC also has information about COVID-19 online as well, at https://unitedhorsecoalition.org/covid-19-resources.

Financial

Bryan Brendle, director of policy and legislative affairs at the American Horse Council, detailed the latest business and economic measures being deployed against COVID-19. He said Congress passed the Coronavirus Aid Relief and Economic Security Act or CARES Act on March 27.

The $2 trillion relief package will deliver billions in emergency aid to small business, some nonprofit groups, sole proprietors, independent contractors and the self-employed. The provisions also include programs that will provide cash rebates to individual taxpayers.

Brendle said the Paycheck Protection Program will deliver funds to pay up to eight weeks of payroll costs.

“Because most equine operations identify as a small business, this package includes many provisions that should help the horse industry,” he said. “The SBA caps the loans at $10 million, or two and a half times your average monthly payroll cost, whichever sum is actually smaller.”

In the event an employer uses the funds to cover payroll, utilities, mortgage interest or rent, the Small Business Administration will forgive the debt, effectively converting the bridge loan into an outright grant. To participate, a business must employ fewer than 500 workers. The PPP rolled out in two phases. April 3 lenders started processing loans for small businesses and sole proprietors. On April 10, the SBA began processing loan applications for independent contractors and the self-employed.

“These are two classes of people who have not been covered under past programs,” Brendle said. “Those interested in applying for a loan should consult their bank.”

Banks must be FDIC insured and an SBA lender or Farm Credit Service provider, Brendle said. SBA lenders include entities like Wells Fargo, JP Morgan, International Bank, and the First Home Bank, while the Farm Credit system banks include CoBank, AgriBank, AgFirst Farm Credit Bank, and the Farm Credit Bank of Texas.

“AHC recommends that those who have relationship with the Farm Credit system institution work with those providers,” Brendle said. “These banks have a great deal of experience processing disaster loans related to floods, tornadoes and other events, so they know the drill more than your typical commercial lender.”

Because paycheck protection is emerging as the most sought after program for businesses, Brendle recommends going to the U.S. Department of Treasury’s website for resources. There, visitors will find links to 12 helpful documents, including a program overview, criteria for borrowers, and a copy of the three-page application.

There is another existing loan program available in which the CARES Act repurposed to focus on COVID-19, according to Brendle. The Economic Injury Disaster Loan Program or EIDL includes any individual operating as a sole proprietor or independent contractor from Jan. 31 to Dec. 31 of 2020. Prior to the CARES Act, this group was not eligible for this program. AHC is recommending non-profit groups not organized as a 501(c)3 operation consider the EIDL.

“This would include many breed specific associations and state groups, many of which are organized as 501(c)6 operations,” Brendle said. “According to SBA, the EIDLs offer up to $2 million in assistance. You can provide vital economic support for small businesses to help overcome the temporary loss of revenue.”

The loan requirements include waivers of the personal guarantee for loans less than $200,000. Recipients can use loans to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of this disaster’s impact. SBA sets interest rates at 3.75% for small business in 2.75% for nonprofits. SBA is offering a long-term repayment plan up to a maximum of 30 years terms are determined on a case-by-case basis. Additional loan borrowers can apply for a $10,000 emergency advance that they do not have to repay.

“Even if SBA denies that loan disaster application borrowers do not have to worry about having to pay the $10,000 advance,” Brendle said. “The CARES Act requires SBA to issue additional guidance on the EIDL process no later than April 11.”

SBA is processing loans at an unprecedented rate in high volumes. As of April 8, there’s been 330,000 applications processed, totaling more than $70 billion in loans.

“JP Morgan alone has received more than 400,000 applications, and so far SBA dispersed 88,000 loans to local banks,” Brendle said. “To place this figure in context, there are more than 30 million small businesses in the United States. If SBA continues to process loans at this rate, the agency can burn through the $850 billion within the next three weeks.”

Brendle expects Congress and the president to prioritize continued funding of SBA loans within the context of a “so-called phase 4 relief package legislation.” The administration is proposing an additional $250 billion dollars for emergency loans.

For those employees who have already lost their jobs or have been furloughed, the CARES Act should bolster unemployment benefits to sustain workers until normal operations resume.

“Unlike many jobs programs, the bill extends unemployment benefits to the self employed, independent contractors, those with limited work history, and others are unable to work as a direct result of pandemic,” Brendle said. “Self-employed professionals such as trainers and independent contractors impacted by bid cancellations should find this program pretty helpful.”

The new law extends unemployment benefits for 13 weeks beyond the expiration date of state programs.

“As a general matter, state benefits usually expire after about 26 weeks,” Brendle said. “The CARES Act provides $600 per week of federal benefits, in addition to those provided by the state programs. Unfortunately, there are widespread reports that state unemployment offices are underfunded and understaffed.”

As far as if those in the equine and agriculture industries qualify for the PPP or the EIDL, during the April 8 webinar, the picture was unclear.

“Anybody who is not eligible to qualify for paycheck protection should strongly consider the EIDL, and at this time, we are not sure how broadly the SBA is using that exclusion regarding agriculture,” Brendle said. “We’re following up on that. It could be an error or exclusion. For whatever reason, you’re disqualified or bank disqualifies you from PPP, definitely seek the EIDL.”

For more information for horse owners visit www.horsecouncil.org/covid-19-resources.

Kylene Scott can be reached at 620-227-1804 or [email protected].