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AUGUSTA, Maine — More than 16,000 Maine small businesses received loans through a federal program that is now out of money, while others are hoping that Congress allocates additional money in order to help them remain afloat.
Roughly one in every 10 small businesses in the state received loans totaling more than $2.2 billion, according to the office of Sen. Susan Collins, a Republican who championed the program as part of a $2.2 trillion stimulus package aimed at the coronavirus outbreak.
The so-called Paycheck Protection Program offers loans to businesses with less than 500 employees that are converted to grants if the businesses successfully keep workers on payroll. Nationally, there was $349 billion available in federal funding for the program, which stopped taking applications Thursday morning in a congressional stalemate.
Republican senators have asked for an additional $250 billion for the program, while Democrats have also called for additional funding for hospitals and municipalities to be a part of the next stimulus package. Leaders from the two parties have yet to reach a deal.
Full-service restaurants were the top recipient of the loans in Maine, according to data provided by the Small Business Administration through Collins’ office. They were followed by hotels, law offices, limited-service restaurants and automotive repair shops.
The virus has prompted an economic shutdown that has hit the hospitality industry the hardest. Food and lodging workers make up around 10 percent of Maine’s labor force but have accounted for 29 percent of jobless claims over the last four weeks.
Greg Dugal, a lobbyist for HospitalityMaine, a trade association for hotels and restaurants, said the program had been a “lifeline” for much of the industry in Maine. But others, he said, had prepared to file before the program stopped taking applications.
“We’re obviously pretty devastated by the fact that the fund has dried up, not that we didn’t expect that it would,” Dugal said. “I don’t think there’s anyone on the face of the planet that didn’t expect that it would, and obviously expeditious legislation at the federal level will hopefully refill those coffers.”
Kate Rush, a spokesperson for Bangor Savings Bank, said the bank processed $365 million in loans for more than 2,600 customers before the Small Business Administration stopped accepting loans a little after 10 a.m. on Thursday. She said the bank had put in extra work over the past few days to get loans through in anticipation of funds running out, but still had a handful of customers with applications in the works when the program shut down.
The Paycheck Protection Program got off to a rocky start as banks struggled to close on loans amid changing guidance from the federal government. Some business owners have also expressed concern that it might be difficult for them to adhere to the terms of the loans in order to avoid having to repay them. The law mandates that 75 percent of the loan must be spent on payroll and employees must be returned to full-time equivalency by June 30.
Collins said in a release on Thursday that high demand for loans showed an “urgent need” for Congress to act quickly to continue funding the program.
U.S. Rep. Jared Golden of the 2nd District, a Democrat, joined the Republican senator in calling for increased funding, suggesting another $349 billion. However, he also argued that the federal government should also amend some requirements to ensure loans would be fully forgivable for more businesses.
In a letter to congressional leaders, Golden said the program “may fail to save some small businesses from going under.” HospitalityMaine has argued that the loans should be converted to grants and that the federal government should extend the forgiveness period into late July.
Small businesses employed 56.5 percent of Maine’s private workforce in 2019, according to federal data. That’s higher than the national average of 48 percent.
Data on the full allocation of loans by state were not available on Thursday, but numbers released by the Small Business Administration earlier in the week indicated that Maine was doing better than most states in terms of loans administered on a per-capita basis.
Other states that received a high number of loans through the program on a per-capita basis, such as North Dakota and Vermont, are also among those with the greatest share of workers employed by small businesses.