The Small Business Administration announced changes to its Paycheck Protection Program on Thursday that allow fishing boat captains to use forgivable loans available through the U.S. CARES Act to pay their crew members.

Deck hands had previously been able to apply for Paycheck Protection Program funds on their own, as independent contractors, but not that many did, according to Maine banks that helped process applications for the loans that are designed to keep people working during the COVID-19 pandemic. Boat captains could not apply for their crew or include their crew members’ salaries in the captain’s own forgivable loan application.

But on Thursday, the SBA announced a new rule that would allow most Maine lobster boat captains to claim crew, or what in Maine is called a sternman, in their own PPP loan applications. To be eligible, the captain must have paid the crew a share of the proceeds of the catch, employ no more than 10 crew and have reported the salaries to the IRS for tax purposes.

“The administrator has determined that the relationship of a fishing boat owner and a crew member … is analogous to a joint venture or partnership,” the agency concluded. “The fishing boat owner and crew members each contribute labor or resources to a common commercial enterprise, and the owner and crew members share in the enterprise’s profits.”

With many restaurants shuttered, and typical export pipelines closed, demand for lobster and other Maine seafood has collapsed, leaving the state’s $674 million-a-year commercial fishing industry scrambling for new markets and short-term economic relief to survive the pandemic.

Maine has received about $20 million of the $300 million in federal COVID-19 relief funding set aside to help the seafood industry. The Maine Department of Marine Resources, which is in charge of administering Maine’s share, has not yet decided how the money should be divided up among the various fisheries and supply chain partners.

Many fishermen did not apply for the Paycheck Protection Program before the first round of funding ran out, afraid they might have to repay the loan if they misunderstood the complicated federal guidelines, including the crew salary issue. More applied in the second round, but exact numbers aren’t known because the SBA has yet to release detailed PPP records.

Many boat crew members found it easier to apply for pandemic-assisted unemployment once the state opened it up to the self-employed instead of applying for a forgivable loan as an independent contractor, banking officials said. But those who have yet to do either now have two days – until June 30 – to take advantage of this last-minute program expansion.

“Extending the program to fishermen impacted by the pandemic will be a critical lifeline so they can continue to provide Americans with the safest, most sustainable seafood in the world,” said Leigh Habegger, executive director of the Seafood Harvesters of America. “We urge all eligible fishermen to take advantage of this program before the deadline.”

Lobstermen are just starting to set their traps, and even in a good year, start-of-the-season fishing is usually more about laying claim to specific fishing turf than about the catch. Most don’t land much until July, depending on weather and when the lobsters shed their shells.

But Maine has a growing number of lobstermen – about one in four – who harvest hard-shell lobsters offshore, year round. Winter fishing is hard, but it can be profitable, with March and April yielding the highest per-pound prices of the year at $7.79 and $7.28, respectively, according to five-year state data.

The virus has sent prices at the boat tumbling, with lobster fetching as little as $2.60 a pound in some Maine ports this spring.


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