The Minnesota Department of Employment and Economic Development (DEED) has announced details on the Minnesota Small Business Relief Grants Program, with sign up beginning June 23.

This program will make available $10,000 grants to Minnesotan owned and operated businesses that can demonstrate financial hardship as a result of the COVID-19 outbreak. A total of $60.3 million is available for grant awards, which will be selected through a computer-generated, randomized selection process.

According to the Minnesota Department of Agriculture, for-profit farms, as defined by IRC section 183, are eligible for the grant. Hobby farms do not qualify.

Grant funds can be used for working capital to support payroll expenses, rent, mortgage payments, utility bills and other similar expenses that occur or have occurred since March 1, 2020, in the regular course of business. All uses must be exclusively for Minnesota operations. These are grants and no repayment will be required.

Awards will be disbursed and administered in mid-July by qualified local and regionally based nonprofit organizations.

To learn more or begin applying at 10 a.m., visit the DEED website.

Additional information on for-profit farms

The IRS defines the “business of farming” at 26 CFR1.175-3 as cultivating, operating, or managing a farm for profit either as owner or tenant. This includes livestock, dairy, poultry, fish, fruit and truck farms as well as plantations, ranches, ranges, orchards and groves.

The IRS distinguishes for tax purposes and the allowance of business deduction expenses between farms operated for profit and farms which are “an activity not operated for profit,” the so called “hobby farms.” To be considered a farm operated for profit, the farm must show that its gross revenues exceeded its business deductions for three of the last five years (IRC section 183).