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Maine Economic Renewal Grant


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Maine Economic Renewal Grant

By: Andrew Wells

IN BRIEF

On Friday, August 21st the Maine Economic Recovery Grant Program began its application process. The program will utilize funds from the federal Coronavirus Relief Fund to offer grants to Maine businesses and nonprofit organizations who have been negatively impacted by COVID-19 based on lost revenues or additional expenses due to the pandemic. The intent of the program is to offer aid to businesses so that they may stay viable during these challenging economic times.

Businesses may only apply for the grants through the Maine Department of Economic & Community Development’s online portal. The deadline for applications is September 9th, and grants will not be awarded on a first come first serve bases. Thus, there is not a frantic rush for businesses to get applications in early in order to get to the front of the line.

Eligible Expenses, Financial Need, and Eligible Businesses

Eligible Expenses

The grant proceeds are required to be used for operating expenses, protective equipment to protect staff and patrons from COVID-19 risks, as well as equipment and investments in the business.

The following are listed as eligible expenses for the grant funds:

  • Payroll
  • Rent and/or mortgage
  • Protective equipment
  • Business-related equipment
  • Long term investments into the business
  • Expenses incurred to replenish inventory
  • Operating expenses

Additionally, the proceeds are required to be spent on operations in Maine and an eligible applicant must have “significant operations” in Maine. “Significant operations” is defined as either having a headquarters in Maine or having at least 50% of a business’s or non-profit’s employees and contracted contract employees based in Maine. The grantees must be in good standing with Maine state payroll, sales, and income taxes. For example, if an applicant has a payment plan with Maine Revenue Services, the applicant must be up to date with the payments under the plan to be eligible for the grant. Additionally, non-profit applicants must be organizations that file an annual form 990 or 990-EZ. Applicants must also be in good standing with the Maine Department of Labor.

Conversely, the guidelines state that grant proceeds may not be used for the following expenses:

  • Depreciation expense
  • Entertainment
  • Lobbying
  • Personal goods and services
  • Fines, penalties, damages, and other settlement

Financial Need

Businesses must show the need for financial relief based on lost revenues and expenses incurred since March 1 due to COVID-19 and the public health response resulting from the global pandemic. An applicant must be able to show that it expects to lose at least 20% of its net income in 2020. For nonprofit organizations, net income includes charitable contributions, membership dues, etc.

Eligible Businesses

The grant guidelines state that the following businesses and nonprofit organizations are not eligible to receive grant proceeds:

  • Professional services except for those professional services explicitly eligible [1]
  • Organizations that are tax exempt under IRC sections 501(c)(4) and 501(c)(6)
  • Municipalities and subdivisions
  • K-12 schools, including charter public and private
  • Assisted living and retirement communities
  • Nursing homes
  • Foundations and charitable trusts
  • Trade associations
  • Credit unions
  • Insurance trusts
  • Scholarship funds and programs
  • Gambling businesses
  • Adult entertainment businesses
  • Country clubs, golf clubs, and private clubs
  • Cemetery trusts and associations
  • Fraternal orders
  • Hospitals, nursing facilities, institutions of higher education and child-care organizations

Moreover, the guidelines state that an eligible applicant must:

  • Have been in operation for at least a year by August 1, 2020
  • Not be in bankruptcy
  • Not have permanently ceased all operations
  • Be in compliance with the COVID-19 “Prevention Checklist”
  • Not be under any current or past enforcement action due to Maine’s COVID-19 requirements
  • Employ a combined total of 50 or less employees and contract employees throughout 2020

Affiliated Groups

Affiliated groups may only file one grant application for all the affiliated businesses. For purposes of the Maine Economic Recovery Grant, a business/organization is considered affiliated with any other business/organization that:

  1. Has the same EIN or social security number
  2. Has the same corporate parent or grandparent
  3. If more than 50% of the business is owned by the same owner or group of owners
  4. In the case of nonprofits, is a subsidiary of a “parent” organization

Grant Distribution Criteria

The grants will be distributed based on a calculation of the applicant’s losses due to COVID-19 from January through June 2020 in proportion to all other applicants. The calculation will be determined by comparing income and expenses for 2017, 2018, and 2019 in contrast to the net income for the applicant in the first six months of 2020. Unexpended PPP loan funds and other federal funds received, as well as unemployment compensation received by sole proprietor business owners are removed from the calculation.

Bottom Line

If you or your clients have any questions regarding the Maine Economic Renewal Grant, contact us and we will be pleased to assist you.

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[1] Professional services with NAIC codes beginning with 5414 (specialized design services), 5418 (advertising, public relations, and similar services), and 5419 (other professional, scientific, and technical services) are eligible for grant proceeds.

 

This information is provided by Bernstein, Shur, Sawyer & Nelson P.A. for educational and informational purposes only. It is not intended to be, nor should it be construed as legal advice.