If I work on a cruise ship, can I get a PPP loan? (plus 2021 rules updates)

In this 7-minute read:

  • What types of cruise ship workers are eligible for the PPP loan?
  • If I get the PPP loan, how can I spend it?
  • How much of a PPP loan can cruise ship workers get?
  • How can cruise ship workers get PPP loan forgiveness?

The coronavirus pandemic has taken its toll on small businesses and independent contractors, especially those in the entertainment industry. Hot vacation commodities like cruises have had to go on hiatus, causing financial stress on everyone involved in the business. 

The Paycheck Protection Program was created to help businesses and individuals during this time as they face uncertainty in the future of their business. This program can help your business get the funds it needs to keep your workers (or yourself) paid while you wait to see what happens next. 

In this article, we’ll cover how the PPP can help eligible cruise ship workers and how you can apply for loan forgiveness after your loan is spent. 

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What types of cruise ship workers are eligible for the PPP loan?

The type of cruise ship worker that you are (performer, cook, maid, engineer, etc.) doesn’t matter as much as the status of your employment with that cruise line. If you work on a cruise ship as an independent contractor, sole proprietor, or self-employed individual and can verify that with your tax forms (usually Form 1040 Schedule C), then you meet the first eligibility requirement for the PPP loan. 

If you are employed by the cruise line as a W2 worker, then you wouldn’t be able to apply for the PPP loan with your W2 job. However, if you have another gig as an independent contractor or you own a side business, you can and absolutely should apply for the PPP loan with that job. 

Some recent updates have been made to the PPP that allow some Schedule C borrowers to take out an even larger loan. On February 22, 2021, the Biden-Harris administration announced these PPP updates:

  • Schedule C applicants can use their gross profits instead of net profits to calculate their maximum loan amount
  • Borrowers with student loan delinquency can now apply for the loan
  • Borrowers who are non-citizen residents and file using an ITIN can now apply for PPP loans

These changes allow even more people to apply for the PPP loan. However, while this may open up the opportunity for you to apply, there are a few more requirements you’ll need to meet in order to qualify:

  • To qualify for a first draw loan (meaning this is your first PPP loan), you must have the right employment status, you must have been in business as of February 15, 2020, and you must make at least $4800 annually with the business you are applying under
  • To apply for a second draw loan (meaning this is your second PPP loan), you must meet the following requirements:
    • You have already received a PPP loan
    • You have spent your first draw funds by the time your second PPP loan funds are disbursed
    • You can show a revenue reduction of 25% or more when comparing any quarter in 2020 to 2019
    • (You must also have fewer than 300 employees)

For more information about PPP loan eligibility and special circumstances that may apply, please review our PPP eligibility FAQ

If I get the PPP loan, how can I spend it?

The PPP loan doesn’t come without its rules. There are certain approved expenses for which you can use your PPP funds. And if you don’t spend these funds according to the rules, then you won’t qualify for loan forgiveness. 

The first, and most important, rule is that you have to spend at least 60% of your funds on payroll costs. If you have employees, those funds need to go towards maintaining your employees and their compensation levels (as well as your own). If you are your only employee, or if you are an independent contractor, sole proprietor, gig worker, etc., then you can spend that entire portion (up to 100%) on your own income. 

The other 40% of your PPP loan can go towards these approved business expenses:

  • Mortgage, rent, or utilities: any of these costs related to your business that you can deduct from your business taxes are eligible for PPP loan coverage
  • Interest payments on debts: you can use your PPP funds to cover any interest payments on business-related debts (business loans, credit cards, etc.)
  • Costs for operations: if you use any business software or cloud computing services to help manage necessary business functions, you can use your PPP loan to help cover those costs. That might include invoicing software, payment processors, inventory management, applications that help facilitate product or service delivery, or software for other billing and sales functions
  • Supplier costs: any costs incurred from suppliers in the form of purchase orders or contracts made before the first day of your covered loan period 
  • COVID-19 expenses: PPE, sneeze guards, cleaning supplies, and other major expenses related to keeping yourself, employees, and/or customers safe from the spread of COVID-19
  • Property damages: this includes property damages to your business (maybe you have an office that you manage everything from) caused by the 2020 public disturbances and riots. You can only use the PPP loan for any costs that weren’t covered by insurance

It’s important to track your expenses as you spend your PPP funds on them so that you can verify each expense during the forgiveness process. 

Check out this article for tips: Tracking PPP expenses to maintain forgiveness (tools and tips!) 

How much of a PPP loan can cruise ship workers get?

Funds for the Paycheck Protection Program are limited, so a specific calculation has been formulated to help determine the maximum loan amount that any business can receive. For self-employed individuals without employees, follow these steps to calculate your maximum loan amount:

  1. Find your 2019 or 2020 IRS Form Schedule C (you can choose which one to use). On that form, get the number on line 7 for your gross profits. If that number is more than $100,000, lower it to $100,000.
  2. Take the number from Step 1 and divide it by 12 to get your average monthly profits. 
  3. Multiply your average monthly profits by 2.5 to get your maximum loan amount. 
  4. Bonus: If you received the Economic Injury Disaster loan in 2020, you may be able to increase your max PPP loan. Add any outstanding amount of your EIDL made between January 31, 2020 and April 3, 2020 to your max loan amount from Step 3. Just don’t include any advance that you received on your EIDL as that doesn’t have to be paid back. 

NOTE: PPP applicants that fall under NAICS code 72 (food and accommodation businesses—which many contractors and workers under the umbrella of cruise ship workers may be in—may now calculate their max loan amount using 3.5X their average monthly payroll for second draw loans only. Read more about the 3.5X PPP loan calculation for second draw NAICS category 72.

Understanding how much you can receive for the PPP loan will help you plan where those funds can go in order to receive loan forgiveness. 

How can cruise ship workers get PPP loan forgiveness?

The best part of the PPP loan is that it was intended from the outset to be 100% forgiven, and as long as you spend your funds on the approved expenses outlined earlier in this article, you’ll be able to apply to have your loan forgiven and you won’t ever have to pay it back. 

To receive PPP loan forgiveness, you’ll need to put in your application within 10 months of the last day of your covered loan period. 

To apply for loan forgiveness, you should first check if your lender has opted-in to the new SBA PPP Direct Forgiveness Portal. If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.

If the above doesn’t apply to you, contact your PPP lender and complete the correct application form:

  1. Ask your lender to help you complete the appropriate PPP loan forgiveness application
  2. Fill out the application and gather any documentation you might need to verify your expenses (bank statements, receipts, invoices, cancelled checks, etc.)
  3. Submit your application and documentation via your lender and they’ll process it with the SBA. Your lender will also inform you if there is anything else you need to include with your application

Once a decision has been made, your lender will notify you whether or not you have been approved for loan forgiveness. 

Here are some additional resources about the PPP loans and forgiveness that you may find helpful:

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