NCC on Wednesday sent a letter to Small Business Administration (SBA) Administrator Jovita Carranza and the director of the SBA 7(a) Loan Program requesting a delay to October 1, 2020 of the effective date of the Interim Final Rule (IFR) addressing affiliation principles for poultry loans.

The SBA on February 10 released an IFR establishing a review process whereby SBA would review farmer contracts and make an “affiliation” determination – whether that farmer was “affiliated” with a chicken processing company, thus ineligible for SBA assistance through loan guarantees – based on a set of criteria newly announced in the Interim Final Rule. These changes would substantially affect the operations of many small, family farms across the country.

Importantly, the comment period for the IFR closes on April 10, 2020, but the effective date of the poultry-related provisions goes live on March 11, 2020. NCC’s letter requested that SBA extend the effective date to October 1, when the remainder of the rule’s provisions goes final. This would provide stakeholders the opportunity to comment and SBA the opportunity to consider those comments before finalizing the rule.

Additionally, the House Small Business Committee on Wednesday held a hearing on general SBA issues and the FY2021 SBA budget request with Administrator Jovita Carranza testifying. Several Members of Congress discussed the IFR with Administrator Carranza in their time for questioning.

Rep. Kevin Hern (R, OK-1) asked several questions of the Administrator, focusing on the timing and effective date of the IFR’s affiliation provisions. Specifically, Rep. Hern asked what logic was behind finalizing a rule before a comment period closes, stating that the IFR would be disruptive to farmers in his district. SBA Administrator Carranza was unaware of this timing, but committed to Rep. Hern that she would look into it and be in touch with him.

Another member of the House Small Business Committee, Rep. Dan Bishop (R, NC-9) asked Administrator Carranza about the contents of the affiliation provisions of the rule. Administrator Carranza reiterated that she did not want poultry lending through SBA to stop. They agreed to meet about it privately at a later date.