Shipyard workers get zero-interest loans during shutdown: More banks needed

KITTERY, Maine — A local lawmaker is asking credit unions and banks to opt into the state’s Government Shutdown Loan Guarantee Program to ease financial strain on Portsmouth Naval Shipyard employees and federal workers around Maine.

Democratic state Rep. Kristi Mathieson, a Kittery resident, was the prime sponsor for LD 874, "An Act to Provide Relief to Federal or State Employees Affected by a Federal Government or State Government Shutdown,” that Gov. Janet Mills signed into law in July. Eligible workers affected by the government shutdown can apply for and receive upwards of three $6,000 interest-free loans durSeing the course of the pay stoppage. 

NH and Maine senators part of deal: Senate takes a first big step to end government shutdown

But to date, Seaport Federal Credit Union and Franklin Savings Bank are the only two institutions that are participating in the loan program. Mathieson noted Kennebunk Savings Bank was enrolled in the program but paused participation last month.

“I would really like to see more financial institutions taking part in it,” Mathieson said of the program. “Too many people are hurting right now. We need to help them out in any way we possibly can and this is one tool in the toolbelt to help.”

How the Government Shutdown Loan Guarantee Program works

Loan recipients are given a 90-day repayment grace period after receiving the money. However, if a government shutdown lasts longer than that roughly three-month time frame, the grace period won't end before the shutdown concludes, according to the law.

After the end of a shutdown or a three-month grace period, whichever comes later, grantees must then pay back the loan within 180 days. If a loan is not paid back within that time frame, the law allows lenders to charge interest and fees.

No loan applications will be accepted after a government shutdown ends.

“A financial institution may not approve a loan under the program after a shutdown ends,” the law states.

The state has set aside $250,000 from its Other Special Revenue Funds account for the program to ensure lenders are repaid after they file a claim for an outstanding balance.

More help during shutdown: Seacoast restaurants and pantries offer free food amid SNAP crisis

Without more credit unions or banks on board, the program won’t reach as many shipyard workers or federal employees throughout Maine.

The law does not prohibit federal employees with a low credit score from accessing a potential loan.

“An eligible financial institution may not use an affected employee's creditworthiness as a factor for the purposes of determining eligibility for a loan under this subchapter,” the law states.

The Finance Authority of Maine administers the program.

How many shipyard workers have taken loans?

Meredith Whitfield, spokesperson for the state agency, reported 128 federal workers in Maine have received $648,000 worth of loans as of Friday, Nov. 7 dating back to the start of the shutdown.

Seventy-two of those grantees are Portsmouth Naval Shipyard civilian employees, according to Whitfield. A total of $366,000 has been distributed to them.

More: Portsmouth Naval Shipyard firefighters on verge of quitting over no pay during shutdown

“We do not have access to pending loans with the participating financial institutions,” Whitfield said. “Only loans that have been originated are reported.”

The U.S. government shutdown is the longest in America’s history after taking effect Oct. 1.

Shipyard union leaders says workers are hurting

Bills and expenses are beginning to pile up for Portsmouth Naval Shipyard employees, said American Federation of Government Employees local union president Bill Webber.

Less tenured members of Webber’s union may soon be walking out the door and quitting after going multiple pay periods without a check. 

“It puts a lot of stress on everybody,” he said. “The mood on the shipyard is enough is enough. It’s time to get things back to rolling where they were.”

Webber knows just one shipyard civilian employee who has accessed a shutdown loan through the state program. 

“It’s been really hard for our federal furloughed employees to access this,” Mathieson said. “It’s been even harder for those who are essential workers, which is pretty much all the people at Portsmouth Naval Shipyard. “I would have liked to have seen more institutions take part in the program to date. I’ve encouraged members to talk to their institutions. I’ve encouraged members to talk about what options they have.”

All FDIC- and NCUA-insured institutions may qualify as a lender for the program. Lender applications must be submitted to the Maine Bureau of Financial Institutions, which determines eligibility within five business days of receiving a proposal.

This article originally appeared on Portsmouth Herald: Shipyard workers get zero-interest loans during shutdown: More banks needed