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Money is starting to roll out of a massive new federal program aimed at giving small businesses a lifeline, but backlogs remain in the high-demand program as Maine’s hospitality industry pushes for changes.
More than 8,400 small businesses in Maine have been approved for more than $1.5 billion in forgivable Paycheck Protection Program loans as of Saturday, according to Sen. Susan Collins, R-Maine. Dozens of Maine lending institutions are in the program. But the rollout continues in fits and starts, with holdups by the federal agency overseeing the loans.
The $350 billion program, a centerpiece of the $2.2 trillion stimulus package passed last month, will guarantee loans to small businesses affected by the virus. Maine businesses have flocked to the program since it opened last Friday. Applications for self-employed people opened Friday.
Bangor Savings Bank has received more than 1,500 applications, with 1,300 approved worth a total of $270 million, said spokesperson Kate Rush. The bank has closed on $80 million of them. But because the U.S. Small Business Administration asked it to stop processing applications on Sunday and then restart them on Tuesday, it has more than 1,000 applications worth about $190 million awaiting closure, Rush said.
The loans forgive money used for payroll, mortgage interest, rent and utilities payments over the eight weeks after the applicant receives the loan. At least 75 percent of the forgiven amount must be spent on payroll. However, the amount forgiven depends on how many employees the business has in the eight weeks after it receives the loan, according to the Small Business Administration. Lenders have 10 days to close the loans.
Acadia Federal Credit Union, based in Fort Kent, received just shy of 100 applications worth about $4.7 million, said Brian Stoliker, commercial loan manager. It has paid out roughly one-third of the loans, though it expected to pay out many more on Friday and Saturday. The applications range from $2,200 to more than $1 million, and the average request is $50,000.
Members of the Maine Credit Union League have approved 110 loans in southern Maine, 125 in northern and central Maine and 13 in eastern and coastal Maine, said Jen Burke, spokesperson for the league. She said some loans have been paid already.
The hospitality industry has been particularly hard hit by the COVID-19 restrictions. Steven Hewins, president and CEO of the trade group HospitalityMaine, wrote a letter to Collins this week asking for the paycheck program to turn the forgivable loans into grants and extend the forgiveness period at least until late July.
On Wednesday, Heather Sanborn, co-owner of Rising Tide Brewing in Portland, received the $200,000 she applied for, though she was hoping to delay the loan because of the provision requiring companies to fully restaff within eight weeks of the disbursement to get full forgiveness on the loan.
Fred Forsley, president of Shipyard Brewing Co. in Portland, said the government needs to provide more flexibility to borrowers in order to keep the restaurant industry afloat.
He said many restaurants still owe tens of thousands of dollars for food and alcohol that hasn’t been sold or went bad due to the sudden shuttering of the industry. Many still need to pay rent and insurance, and will also need to purchase more food to reopen. None of those are payroll costs.
“It’s a great thing they’ve done,” Forsley said. “But the only way they can really benefit the industry is to adjust what restaurant people can use the funding for.”
Rep. Jared Golden, a Democrat from Maine’s 2nd District who sits on the House small business panel, has called for an additional $350 billion for the program, which is more than the $250 billion being pushed by Collins and the administration of President Donald Trump. The extension was held up by Senate Democrats on Thursday as they look for a larger deal.
Collins said that was unfortunate in a statement, adding that she wants to see the deadline for applications extended if more funding is secured. Golden, however, said he wants funding for rural hospitals and community groups as part of a spending package.
In a Friday interview, Golden said his office had been hearing about issues with the program from small business owners, including concerns that the terms of the loans might make it difficult for some small businesses to get their loans forgiven.
Golden noted that rolling out a massive new program in a week was always going to pose challenges, saying it was “too early” to call the relief package a success or a failure. He said “congressional intent was to be fairly flexible in working with business owners to achieve the maximum forgiveness possible” and businesses should not be made to take on more debt.
“Hopefully providing the type of feedback that the [Small Business Administration] needs, and the banks need, and small businesses need, we can make the program work as best as possible on very short notice,” he said.
BDN reporters Josh Keefe and Jessica Piper contributed to this story.
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