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  • Writer's pictureBen Martens

Paycheck Protection Program 2.0

A better oportunity for fishing businesses

Early in the economic disasater of 2020, the The U.S. Small Business Administration administered a forgivable loan programed called the Paycheck Protection Program (PPP). This program was intended to support small businesses through the COVID pandemic and in Maine 1,358 lobstermen were able to access some of these funds. While not without its issues, this program was considered a success to the extent that a second round of funding was issued this past winter. The Paycheck Protection Program now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms (meaning they are forgivable) as their First Draw PPP Loan. Learn more on the SBA Site

The Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, and certain supplier costs and expenses for operations.

There are two significant changes to this round of funding.

  1. a business must be able to demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

  2. PPP amounts will be calculated based on Gross Income instead of Net Income.

In the original PPP, sole proprietors were put at a disadvantage. Earlier this month, the SBA implemented a rule change regarding how to calculate the amount of money small businesses can qualify for. It is specifically for Sole Proprietors filing a Schedule C.

The SBA rule change for this second round of the PPP allows a Sole proprietor to use Line 7 of their Schedule C instead of Line 31 to calculate how much money they could receive.

This change is a SIGNIFICANT change because PPP amounts will be calculated based on Gross Income instead of Net Income.

Businesses that have not yet applied OR have not yet received funds from this second round of the PPP should contact their banks immediately.

  • To qualify, business owners must show a 25% decline in income from 2019 to 2020.

  • To apply, business owners need to contact their bank for the application.

The Paycheck Protection Program ends on March 31, 2021. All eligible entities can apply through a participating lender until then.

Any business owner that would like FREE CONFIDENTIAL help with the PPP application should register for an appointment with a Maine Small Business Development Advisor and can do so by clicking on the link below. (You can also call your bank and ask to speak with someone there who is familiar with the PPP.)


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