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Maine small businesses affected by the new coronavirus have been approved for hundreds of millions in federal loans through a new program, but applications have been bogged down amid a warp-speed rollout and late changes that have frustrated owners and banks.
Money may begin flowing to Maine businesses by the end of the week under the Paycheck Protection Program, a centerpiece of the $2.2 trillion stimulus package passed last month. The $350 billion program opened for applications on Friday and will guarantee loans under many circumstances to small businesses that have been affected by the virus.
It opened less than a week after the stimulus was signed into law, sending banks into overdrive to process applications. As of 4 p.m. Monday, more than 1,800 businesses in Maine were approved to receive a total of nearly $511 million, according to U.S. Sen. Susan Collins, R-Maine, who co-authored the part of the law establishing the program.
But Jim Donnelly, chief commercial officer at Bangor Savings Bank, said the quick rollout of the program had been “not smooth” and “challenging,” citing overnight rule changes from the federal Small Business Administration and delays in guidance on closing the loans.
After announcing initial program rules on Thursday, the federal government changed loan terms overnight, delaying the ability to start on loans by several hours on Friday, Donnelly said. On Monday, banks were delayed again after the administration told them to stop closing on loans until it issued further guidance. As of 4 p.m. Monday, they had yet to receive the guidance.
It has come amid heavy demand and deep uncertainty. The virus has led to stay-at-home orders in Maine and 40 other states that were in most cases accompanied by bans on dine-in restaurant services and limits on social gatherings. The state and nation saw two weeks of record-high unemployment filings in March concentrated heavily in the hospitality sector.
Donnelly said his bank received more than 1,300 loan applications as of Monday and had staff working from 7 a.m. to 2 a.m. all weekend to process them. Machias Savings Bank had just over 500 applications totaling about $100 million, spokesman Dan Cashman said on Monday.
“I expected high volume, but it’s higher than I expected,” Donnelly said.
Rising Tide Brewing in Portland laid off 19 employees in the past two weeks, leaving only four plus the two owners, following state and city orders to close indoor serving areas. After applying for a loan on Friday, co-owner Heather Sanborn said she had her approval letter back from Bangor Savings Bank on Sunday.
On Monday, Sanborn, who is also a Democratic state senator, said she was awaiting the SBA guidance before the loan could close. The SBA did not comment on when it would issue the guidance.
“Banks are on overdrive to meet the concerns of customers calling and emailing for help,” said Chris Pinkham, president of the Maine Bankers Association. “We’re doing the best we can as the SBA system is clearly stressed with the volume.”
Many are already questioning whether the loan program will be enough to meet the needs of every small business. Bank of America said Monday morning it had received applications for $32.6 billion in loans, which accounted for nearly 10 percent of all the money allocated by Congress, CNBC reported.
Treasury Secretary Steven Mnuchin has said he would ask Congress for more money if the $350 billion allocated is not enough. That could come in a fourth coronavirus response package under negotiation that could focus on further economic relief and infrastructure.
Renee Smyth, spokesperson for Camden National Bank, said on Monday that interest in the funds was likely to grow as the SBA opened up lending from more financial institutions. She said concerns about future funding were likely pushing business owners to apply early.
“Customers are concerned and want to make sure they’re part of this package and not be late for it,” Smyth said.
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