How to Apply for a Small Business Loan in Maine

Maine

If you’re a small business owner in Maine who’s suffered a temporary loss of revenue as a result of the COVID-19 crisis, you may be eligible for support. Since the creation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, two new small business loans have been made available. Administered by the Small Business Administration (SBA), the loans seek to relieve some of the immediate pressures being faced by businesses due to the current situation. Depending on the extent and nature of loan required, business owners are invited to apply for one, or both, of the following:

Paycheck Protection Program (PPP)

Economic Injury Disaster Loan (EIDL)

Both programs have been created with the express purpose of giving businesses a much-needed cash injection, but without making them jump through the usual hoops involved in taking out a business loan. If you want to take advantage of the program, here’s how to apply for a small business loan in Maine.

Paycheck Protection Program (PPP)

The Paycheck Protection Program aims to incentivize small businesses to retain their workforce through a low interest, zero-fee loan of up to $10 million. Terms are favorable, especially in comparison to many other small business loans, and the application process has been designed to be as streamlined and intuitive as possible. As the loan is intended with the express purpose of supporting payroll and operating costs, the funds may only be used against the following expenditures:

  • Payroll
  • Group healthcare benefits for medical & family leave
  • Wages and other forms of compensation
  • Mortgage interest payments, utilities, rent or pre-existing debts
  • Loan acceptance is conditional on certain eligibility requirements, so check your status against the below criteria before applying.

Who Can Apply For the Paycheck Protection Program?

If you’re a small business owner in Maine who’s suffered financial loss as a result of the COVID-19 crisis, you’re able to apply for the Paycheck Protection Program if:

  • You employ 500 workers or less
  • You employ more than 500 workers but meet the SBA’s definition of a “small business” for your sector. Check the SBA’s size tool to see if your business qualifies.
  • You are a private non-profit
  • You are a 501 Veteran organization
  • You are a tribal business
  • You are an independent contractor or sole proprietor with 0- 500 employees

What Are The Loan Conditions?

PPP Loans are capped at $10 million or $100,000 a year for each eligible employee, with the total amount being determined by length of time in operation. If your business has been in operation since February 15, 2019, the maximum amount of loan you can draw will equate to 250 percent of the average monthly payroll costs from February 15, 2019, to June 30, 2019. For businesses that were not in operation during this period, the maximum loan will equate to 250 percent of the average monthly payroll costs between January 1, 2020, and February 29, 2020. Other than the maximum loan amount, other terms to note include:

  • A 2-year loan maturity with an interest rate of 1%
  • Zero SBA or prepayment fees
  • No collateral or personal guarantee required
  • Payments are automatically deferred for 6 months from the loan origination date

The loan will be forgiven in full if 75% or more of the loan amount is used to retain the current payroll for at least 8 weeks. The remainder of the funds will need to be used on general operating expenses such as rent, mortgage interest payments, and utilities

How To Apply For The PPP

Although the PPP is administered by the SBA, all applications are processed via one of the following:

  • An existing SBA 7 lender
  • A Farm Credit System institution
  • A federally insured depository institution
  • A federally insured credit union

To find a full list of participating providers in Maine, visit sba.gov.

To simplify the process, the SBA has provided a PPP borrower application form that can be downloaded, completed, and submitted to your proffered lender along with the required supporting documentation. Funds are limited and work on a first-come, first-served basis, so it’s advisable to apply as soon as possible to avoid missing the boat.

Economic Injury Disaster Loan (EIDL)

Like the PPP, the Economic Injury Disaster Loan (EIDL) is administered by the SBA and designed to provide working capital loans to businesses that have been adversely affected by the COVID-19 pandemic. Again like the PPP, the EIDL is intended to support with payroll and operating expenses that could otherwise have been covered had the crisis not occurred.

Who Can Apply For the EIDL?

Eligibility for the EIDL is limited to the following:

  • Small businesses (including sole proprietorships) and independent contractors with fewer than 500 employees or who are classed as a small business according to SBA Size Standards
  • Cooperatives and employee-owned businesses
  • Private non-profits

What Are The Loan Conditions?

Loans may only be used against operating and payroll expenses (including wages and other forms of compensation, holiday pay, healthcare and retirement benefits, mortgage interest payments, rent, and utilities) and are subject to the following conditions:

  • A term of up to 30 years
  • Loan acceptance is subject to a credit check and a review of the business tax records by the SBA
  • No administration fees
  • The usual SBA requirement to demonstrate the business has been unable to get credit elsewhere is waived
  • Loans of up to $25,000 do not require collateral or a personal guarantee
  • Payments are automatically deferred for one-year but the loan will begin accruing interest from the origination date, at a fixed rate of 3.75% for businesses and 2.75% for nonprofits
  • A forgivable advance of $1000 per covered employee up to a maximum of $10,000 can be requested

How To Apply For The EIDL

All applications for the EIDL should be made to the SBA via their website. According to the SBA, the application process has been streamlined and should take no more than around 2 hours 10 minutes to complete. Should you require any assistance in completing any section of the application, you are advised to contact your local Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter. For details of your nearest center, visit this site.

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