Compliance Alert

Government Shutdown Loan Program

The Government Shutdown Loan Guarantee Program, which takes effect September 24, 2025, provides no-interest loans to eligible Maine-based federal or state employees during a government shutdown that lasts more than seven consecutive days. Participation is voluntary. Credit unions that opt in assume nearly all of the risk, as the state guarantee is limited to 10% of aggregate program loans across all lenders. 

Each shutdown will be treated separately. The program will be administered by the Finance Authority of Maine (FAME), with funds held by the Office of the State Treasurer. 

For the official application, reporting form, and program guidance, visit FAME’s Government Shutdown Loan Guarantee Program page.

If your credit union chooses to opt in, you must meet the requirements below: 

Although the program is administered by FAME, credit unions who want to partake in the program must apply with the Maine Bureau of Financial Institutions (BFI).  

Maine residents who are federal or state employees affected by a qualifying shutdown—whether working without pay or furloughed—are eligible. 

Employment, income, residence documentation, and an affidavit that includes unemployment benefit information and a certification that the borrower has not obtained a Program loan elsewhere, are required as proof of eligibility. Credit worthiness may not be used as a factor in eligibility. 

Loans under the program may not exceed the lesser of $6,000 or the borrower’s most recent monthly after-tax pay, reduced by an amount equal to four times the borrower’s weekly unemployment benefits (using the greater of the amount eligible for or received). Borrowers may receive up to three loans per shutdown: one initial loan when the shutdown first qualifies, and one more for each additional 30 days of the shutdown. 

Each loan includes a grace period lasting until whichever is later: 90 days after disbursement or the end of the shutdown. During this time, no repayment or interest is permitted. Borrowers must then repay within 180 days after the grace period, in three to six equal installments. Interest may accrue only after this repayment window has expired, in accordance with lender policy and agreement. The law prohibits prepayment penalties or fees.  

Participating credit unions must notify FAME within five business days after each loan is disbursed, providing borrower information and loan details as required by FAME. They must provide written disclosures to borrowers regarding interest deferral, potential federal tax consequences, and sharing of loan information with FAME. Lenders are also required to demonstrate good-faith collection efforts consistent with institutional policy. If a loan remains unpaid, the credit union may file a claim with FAME no earlier than 180 days and no later than 300 days after the grace period ends, provided it can demonstrate compliance with program requirements and its collection efforts. Once FAME pays a guarantee claim, the lender must assign the defaulted loan to FAME for further collection. 

Guarantee Coverage and Funding 

FAME’s guarantee is limited to an amount equal to 10% of the aggregate total of all loans issued under the program across all participating lenders. This means the guarantee is not a full backstop; once the 10% cap is reached, no further claims will be paid, and credit unions remain responsible for all other loan losses. The Legislature appropriated an initial $250,000 in fiscal year 2025–26 to fund the program. These funds may be used both to pay guarantee claims and to cover FAME’s administrative costs. 

Next Steps 

Credit unions should decide whether to participate in the program. Carefully weigh the reputational benefits of participation against the financial and operational risks, noting that the of aggregate program loans. 

If your credit union decides to participate: 

  1. Submit a BFI application and begin to prepare the required forms: borrower affidavit, documentation checklist, and disclosures—including a notice about potential federal tax consequences of deferred or uncharged interest. 
  2. Next, establish reporting procedures by creating a workflow to notify FAME within five business days of each loan, and set a reminder for the 180- to 300-day claims window. 
  3. Ensure your staff are trained on the program. This should include eligibility verification, prohibition on creditworthiness, loan amount calculation, timing rules, and claim documentation. 

Questions

Please contact the League’s Governmental Affairs team if you have questions concerning this voluntary program.