Both the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs have received a second round of funding. PPP loan applications reopened on April 27. SBA has not yet announced when EIDL loan applications will be accepted.
Federal Stimulus Overview:
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. There are several programs which provide financial relief to small businesses, including sole-proprietors, contractors and self-employed. Maine lobstermen, sternmen and fishing businesses should not wait to apply for these benefits.
Every lobstering business is unique, so each lobsterman must assess which programs are the best fit for your business. However, to maximize your overall benefits, the MLA recommends you explore the benefits in this order:
- SBA loans. These forgivable loans will enable you to continue to get paid and cover some of the operating expenses of your business for 8 weeks. These loans include Paycheck Protection Loans and Economic Injury Disaster Loans. You do not have to pay these loans back as long as you meet the terms of the loan.
- Unemployment Benefits. If you are not able to earn an income after this 8 week period, you will still be eligible to apply for unemployment. These benefits have been expanded to include self-employed and contractors and the benefit has been increased by $600/week above the base payment calculated by your previous earnings.
- Small Business Relief through the Finance Authority of Maine. The state of Maine created several loan programs to help consumers and Maine businesses impacted by COVID-19.
- NOAA Fisheries Disaster Relief. You may be eligible for additional benefits under this program. The details of this program are under development and it will likely be administered through the state.
- Stimulus Checks. Everyone earning less than $75,000 will automatically receive $1,200, plus, $500 per child. Those earning between $75,000-$99,000 will receive a pro-rated amount.
SBA (Small Business Association) COVID-19 Loans
Congress created several new loan programs through the U.S. Small Business Administration to support small businesses that you do not need to pay back. These loan programs were co-authored by Senator Collins through the Keeping American Workers Paid and Employed Act. These include the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), Debt Relief, and Express Bridge loans. Borrowers may apply for more than one loan, as long as each loan is used for a different purpose.
Paycheck Protection Program Loans
The Paycheck Protection Program is providing $670 billion in relief to small businesses. The funding was provided in two cycles with initial funding of $350 billion, supplemented with an additional $320 billion. Applications for the second round of funding opened on April 27. Loan applications close on June 30, 2020.
The Paycheck Protection Loan program (PPP) is available to small businesses, sole-proprietors, contractors and self-employed persons. The purpose of this program is to allow businesses to continue to pay workers, whether the business is operating or not. Therefore, the provides funds to pay yourself and your employees for up to 8 weeks. You do not need to run payroll to qualify for this program. Funds can also be used to pay interest on mortgages, rent, and utilities.
Applications are now being accepted by locally approved SBA lenders.
- Call your bank and begin the application process ASAP.
- Online applications may expedite the process. Ask your if they have an online application or “google” PPP loan application and your bank’s name and you may find it there.
- Due to the high demand for this program, many banks have their own policies regarding who can apply.
- Many banks will only accept applications from existing customers.
- Some banks will only accept applications from customers who hold business accounts.
- Lobstermen can only apply for a loan to pay themselves and anyone on payroll.
- Sternmen hired as independent contractors (1099 workers) can NOT be included n the Captain’s PPP loan application.
- Sternmen can and should apply for their own PPP loan to cover lost income. The Captain can not do this for them.
Things you should know about PPP
- If you recorded a loss in 2019, you do not qualify for this program.
- Receiving a PPP loan does not disqualify you to receive unemployment benefits. However, you cannot “double dip”. This means you cannot be paid from unemployment and PPP for the same week.
- You may apply for both a PPP loan and an EIDL loan as long as the proceeds of each loan are used to cover different costs.
The PPP loan pays you 2.5 times the average of your previous 12 months of payments to workers.
As a simple example, if you were paid $12,000 last year through 1099’s or income on your schedule C, your average monthly income would be $1,000 ($12,000 / 12 months). Multiply that by 2.5 to calculate your loan amount. In this example could borrow $2,500 ($1,000 x 2.5).
- The loan proceeds are intended to pay yourself and your workers for 8 weeks.
- If you use 75% of the loan proceeds to pay people, you do not need to pay the loan back.
- The additional 25% is to be used for interest on mortgages, rent, and utilities.
- The SBA has confirmed that boat loans qualify as part of this 25%.
- You can receive this loan whether you continue to work during this period or your business is shut down.
- If you do not use 75% of the loan to pay workers, it’s still a great deal. Loan payments are deferred for six months and you have two years to pay off the loan at 1% interest. No collateral or personal guarantee is required.
Using our example, if you borrowed $2,500, you must pay yourself $1,875 (75% of $2,500) for the loan to be forgiven.
For More Information on PPP
- Read the Maine Small Business Development Centers excellent overview of this loan program here
- Visit the SBA COVID-19 website for info on the PPP loans here
- US Dept of Treasury developed a fact sheet for borrowers here
- A list of participating Maine lenders can be found here
- Find the loan application for the PPP here
- Visit the US Dept of Treasury for addition information here
SBA Economic Injury Disaster Loans
On April 24, the EIDL program received an additional $60 billion in funding (including $50 billion for loans and $10 billion for grants). SBA has not yet announced when applications will be accepted for the second round of funding.
The U.S. Small Business Administration is offering Economic Injury Disaster Loans, for working capital to small businesses suffering substantial economic injury as a result of COVID-19. EIDL loans provide an emergency cash advance of $1,000 per worker, up to a maximum of $10,000, that you do not need to pay back. These loans are for working capital which includes fixed debts, payroll (unless that is covered through a PPP loan), accounts payable, and other bills that can’t be paid due to the disaster’s impact. It does not cover lost sales.
- Apply for SBA EIDL loan online here
- Visit the SBA COVID-19 website for info on EIDL loans here
- Read the Maine Small Business Development Centers excellent overview of this loan program here
SBA Debt Relief and Bridge Loans
The SBA is offering debt relief on SBA loans by paying the principal and interest on any new SBA loans issued before September 27, 2020. The SBA will pay the principal and interest on current loans for a period of 6 months.
The SBA is offering Express Bridge Loans for those who currently have a business relationship with an SBA express lender to access up to $25,000 with less paperwork. These loans will be repaid in full or in part by the EIDL loan program.
Expanded and Increased Unemployment
Maine Dept of Labor began accepting applications for Pandemic Unemployment Assistance (PUA) on May 1.
Big news…. lobstermen and sternmen are eligible for unemployment benefits! Unemployment has been expanded to include self-employed, 1099 contractors, sole proprietors and part-time workers through Pandemic Unemployment Assistance (PUA). For self-employed persons who file for unemployment, your base benefit amount will be calculated based on your previous earnings. Unlike the PPP program, you still qualify if you experienced a loss in 2019. Anyone who qualifies for PUA will receive $600/week in addition to your base benefit.
To apply for PUA, Maine Dept of Labor advises that you do the following:
- Create a ReEmployME account
- Verify your email address in ReEmployME – click on the Benefit Maintenance menu and follow the instructions to receive a confirming email
- Sign up for direct deposit – also through the Benefit Maintenance menu. This is faster than the debit card option
- File your PUA claim – through the Unemployment Claim menu
- File your weekly certification for any weeks after your loss of employment
- Continue filing your weekly certification every week
Important information to help you understand PUA benefits:
- To qualify, your claim must be due to a loss of income as a result of the pandemic.
- Applicants for PUA do not need to meet minimum income criteria. If your business showed a loss in 2019 you can still qualify for the minimum weekly benefit of $172/week plus $600 in federal pandemic assistance ($772 per week).
- If you showed earnings in 2019, the PUA benefit maxes out at $35,000/year which translates to $445/week for your base benefit plus $600 in federal pandemic assistance ($1,045).
- If you earn less than $35,000, your weekly base benefit will range between $172 and $445 and you will receive the additional $600 federal pandemic benefit.
- The $600 week additional federal pandemic benefit ends on July 25.
- If you file for PUA, the benefits can be retroactive to March 15. If you experienced a loss of income due to COVID before then, you would need to open a case which would involve fact finding.
- There is no “work search” requirement to receive PUA benefits through the end of May. However, if work becomes available to you, you are required to take it.
- You can receive partial PUA benefits. Since you certify your income each week, you simply don’t get a PUA check if you earned income in any given week. If you earn income, but it is less than your base benefit, you would get a reduced pro-rated benefit. This means you can do both the PPP program and PUA program.
- If you received a W-2 for any reason in 2019, MDOL advises you to apply for the regular state unemployment and not the PUA unemployment program.
Can you Economic Injury Disaster Loan (EIDL) & Pandemic Unemployment Assistance (PUA)?
- Yes! As long as you do not use the proceeds from the EIDL to pay yourself for any week you are being paid through PUA.
- The standard is that you don’t use funds from more than one program to cover the same expense. No double dipping!
Can you do Paycheck Protection Program (PPP) & Pandemic Unemployment Assistance (PUA)?
- Yes! You can take advantage of the PPP (paycheck protection program) and PUA benefits at the same time, as long as you are not getting paid from both for the same week. No double dipping.
- You can receive partial PUA benefits. Since you certify your income each week, you simply don’t get a PUA check if you earned income in any given week. If you earn income, but it is less than your base benefit, you would get a reduced pro-rated benefit.
- This allows you to be paid through your PPP loan for 8 weeks, or to earn income sporadically while you are participating in the unemployment program.
- MDOL will know which weeks those are because you are required to file a certification with them on a weekly basis. If you have no earnings in any given week, you receive your unemployment benefit. If you do have earnings in any given week, you will not receive unemployment for that week.
- For example, if your PPP money is paying you beginning April 1, you could receive the unemployment benefit for the 2 weeks prior, beginning March 15. You would file your weekly certification with MDOL showing that you are receiving PPP income beginning April 1 for the next 8 weeks. When PPP income is exhausted, your weekly filing with MDOL would reflect no income and your PUA benefit would resume.
Once you apply, MDOL advises:
- Do NOT submit documentations such as your 2019 taxes right away.
- MDOL will reach out to you in late May via email to request your documentation. Sending it in before then will only delay your benefits and slow the system.
- If you qualify, MDOL will start issuing an initial weekly benefit of $172 plus the $600 federal benefit; likely within 7 days. This will be adjusted later once your base benefit is calculated.
- Be sure to set up direct deposit since that is the fastest way to get paid.
- You must file a weekly certification, whether or not you have earnings to report for that week.
- If you earn income in any given week, you would not receive your PUA benefit for that week. If you earned less than your base unemployment benefit in any given week, you would receive a reduced benefit for that week. You only receive PUA benefits during the week’s that you have no other earnings.
Stay in touch with Maine Dept of Labor
For more information on the pandemic unemployment assistance (PUA), visit the MDOL website….
To apply for unemployment, click this link… or call 1-800-593-7660 between 8 a.m. and 3 p.m. Monday-Friday
For password resets and basic questions through a Career Center, click this link….
For more information and resources, visit the Department’s COVID-19 page…
Follow the Maine Department of Labor on Facebook @MElabor and Twitter @maine_labor.
Federal Fisheries Disaster Relief Program
According to NOAA Fisheries, “Section 12005 of the CARES Act authorizes the Secretary of Commerce to provide $300 million in appropriated funds to assist fishery participants affected by the novel coronavirus (COVID–19). NOAA Fisheries understands the urgent need for these funds, and our overriding goal is to distribute the assistance as quickly as possible. To that end, we are working daily with the Department and our federal partners to finalize a process to expedite the distribution of Sec. 12005 funds, consistent with the direction provided by Congress. “
The stimulus includes a stand-alone provision with $300 million dedicated to help fishermen around the country struggling due to disappearing economic markets caused by COVID-19, available until 9/30/2021.
Summary of this program:
- NOAA Fisheries is working to develop the criteria for this program. The funds will be shared among states.
- Available to commercial, charter and tribal subsistence fishery participants; which includes individuals, fishing communities, aquaculture businesses, processors or other fishery-related businesses.
- Must show revenue losses incurred as a direct or indirect result of the coronavirus pandemic of at least 35% relative to prior 5-year average revenue.
- Funds may be awarded on a rolling basis, and within a fishing season, to ensure rapid delivery of funds.
Stimulus checks to individuals
Your payment will be based upon your adjusted gross income (line 8b of the 2019 1040 federal tax return). If you have not filed your 2019 taxes, the IRS will refer to your 2018 return. Alternatively, a 2019 social security statement showing your income can be used.
- Adults earning $75,000 or less will receive a check for $1200
- Married couples with no children earning $150,000 or less receive $2.400
- For each qualifying child age 16 or under, add $500
- Payment decreases for those earning more than $75,000 up to $99,000.
- If you earn more than $99,000, you will not receive a check
- If you are a college student, but your parents claim you as a dependent, you will not receive a check
- Those receiving social security retirement, disability, unemployment and veterans will receive checks.
According to the IRS, those without 2018 tax filings on record could potentially affect mailings of stimulus checks. The IRS will direct deposit the funds into your bank account if it is on file, or mail you a check. Payments are expected to be received within 3 weeks. Payments are not subject to income tax.
Maine-based COVID-19 Small Business Resources
Prior to the development of the large federal stimulus package, the Maine Legislature and the U.S. Small Business Administration (SBA) acted quickly to put several loan programs in place to support consumers and small businesses.
The Finance Authority of Maine (FAME) is offering loan programs to eligible Maine businesses and individuals/employees who experience hardships due to COVID-19.
- COVID-19 Relief Consumer Loan Program provides no-to low-interest consumer loans of up to $5,000 (minus any unemployment benefits received by borrower) through a loan guarantee program involving Maine’s banks, credit unions, and FAME. Interested borrowers should contact their local bank or credit union (not FAME) to see if the lender is offering this program and to apply. A borrower may apply for up to three (3) loans, one per each 30-day period.
- COVID-19 Relief Business Direct Loan Program provides FAME Direct Loans of up to $50,000 with special terms available to Maine-based businesses experiencing interruption or hardship due to COVID-19.
- COVID-19 Relief Interim SBA Finance Loan Program provides FAME Direct Loans of up to $100,000 with special terms available to eligible borrowers who provide proof of commitment for SBA financing. The FAME loan would be originated for use to the business owner until the SBA loan is funded. The SBA loan would then pay-off the FAME loans.
- COVID-19 Relief Lender Insurance Program provides commercial loan insurance of 50-75% to lenders who make loans to Maine businesses experiencing interruption or hardship due to COVID-19.
More information on these and evolving programs can be found on the Maine DMR website and the Maine Department of Economic and Community Development website.
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