Stimulus funding process proving tricky to navigate for smaller seafood operators
The ongoing COVID-19 pandemic has resulted in the U.S. seafood industry being upended as restaurant closures drive down the prices of seafood, leading a number of food organizations to request relief from the government.
The U.S. government launched a relief package in late March consisting of USD 2 trillion (EUR 1.8 trillion) in aid for businesses in the U.S., including USD 300 million (EUR 273.5 million) earmarked specifically for the seafood industry. That package includes incentives to encourage employers to keep people on their payrolls, direct payments to low- to middle-income families, and aid to seafood companies that have lost revenue due to the fallout of the COVID-19 pandemic.
While the historic aid package has been welcomed by the industry, it has also come with its own set of challenges as businesses have to navigate how to access the funding.
Vessel owners that employ crew have faced complications, as concessions made to assist workers in the “gig economy” have made accessing stimulus complicated for them. Part of those complications stem from how the funding is being handed out, with self-employed workers that use a 1099 for tax funding being allowed to access their own set of stimulus funding. The issue is that, by law, fishermen are all considered self-employed if they receive a share of proceeds from the catch, a system used by many vessels in the U.S.
Jesse Rose, a scalloper fishing out of Wychmere Harbor in Harwich, Massachusetts, said that he’s managed to access aid, but that it took a few tries.
“It’s been an ongoing thing. It seems like they’re changing stuff every day,” Rose told SeafoodSource.
Initially, he said, he filed for a payroll protection for himself and his entire crew, but that didn’t work.
“Then they changed it, and we had to resubmit, and do their own,” Rose said.
That change was a source of confusion for a lot of the industry, according to John Williams, executive director of the Southern Shrimp Alliance. When the CARES Act was making its way through Congress in early March, a read of the bill led many small businesses to believe that 1099 employees could be counted as employees toward payroll protection plan loans.
As those businesses began filing their paperwork for the program, they woke up to a change in the language which meant that payments to 1099 independent contractors don’t count toward the loan and loan forgiveness amount, meaning each employee has to individually submit for payroll protection.
That was the case for Rose: had to resubmit his information, and then ask his crew to each file individually.
“The way it worked out, it was a little less for me, but it was more dough in the pot for everyone to split,” Rose said.
However, crew members may be less experienced with navigating finances than their captains, who are typically in charge of the payroll, Williams said.
“Depending on the fishery, this can put fishing vessel crew and processor workers at a disadvantage given their relative lack of banking experience, and in some cases, language barriers,” Williams told SeafoodSource. “How many crew will actually file applications and work their way through the process?”
It isn’t just the seafood industry noticing the complications. Business owners in Maine have said the loan program for payroll protection is too risky, as it comes with strict spending rules and tight deadlines for rehiring staff, something that, with the uncertain timeline of the ongoing pandemic, are hard sells, according to the Portland Press Herald.
According to Williams, those spending requirements – 75 percent of the amount of the loan forgiveness must be payroll costs – caused additional hiccups.
“To be clear, as per the CARES Act, PPP loans and loan forgiveness were to include the applicant’s payroll costs, mortgage interest, rent and utilities,” Williams said. “Thus, many small business owners that submitted pre-applications to their banks prior to when the Interim Final Rule was issued found that they did not meet this surprise criteria and had to start the process over. “
In a program that was seen as first-come, first-served, that led to fears that those that had to resubmit would miss out on funding.
Other small businesses and independent contractors are also reporting difficulties, according to CNN. Depending on individual states, some people have been unable to file, or are running into difficulties as applying for benefits becomes difficult, or even impossible depending on what kinds of mandates have been enforced by the state’s government.
Not everyone is in the same boat. Patrice McCarron, executive director of the Maine Lobstermen’s Association, told SeafoodSource that many of their members have successfully applied. However, it hasn’t always been straightforward.
“The SBA [U.S. Small Business Association] is still working on guidance for the banks to process loans for self-employed and contractors, but I’ve heard from many who have successfully applied,” she said. “This is brand new for everyone, so it has not been straightforward for everyone.”
That’s true for the Gulf of Mexico shrimp industry as well, Williams said.
“I think the one thing that is concerning the shrimp industry is the uncertainty of the entire process,” Williams said. “Some of the stimulus is pretty straight forward while other areas can prove to be somewhat complex in trying to navigate through a myriad of programs while trying to determine what exactly applies to different members of the industry.”
Williams added that the industry, other organizations, will work together to figure out what works the best for each business.
In the meantime, the fact remains that COVID-19 has changed the Gulf shrimp industry, and many other seafood industries, in unprecedented ways.
“The COVID-19 virus has changed this industry to a degree that I have never experienced during my entire shrimping career, and since I’ve been representing the domestic shrimp industry,” Williams said. “The one thing I can say in all of this is that we will persevere. We always have and always will.”
Photo courtesy of J.A. Johnson/Shutterstock