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A federal forgivable loan program provided a lifeline to many Maine businesses and employees hit hard by the coronavirus, but some of the sectors most affected by early layoffs did not receive the most loans, according to data released on Monday.
The U.S. Treasury and the Small Business Administration released the names of more than 650,000 U.S. companies that received Paycheck Protection Program loans by June 30, with more than 27,000 Maine companies getting about $2.24 billion. Only the names of companies receiving from $150,000 or more were released. Those firms made up less than 15 percent of the nearly 5 million U.S. companies who got loans.
The majority of early unemployment claims in Maine came from the hardest-hit industries of food and accommodations, retail and health care and social assistance industries, according to state data from mid-April.
While each of those industries received a significant share of the state’s loans, the program, designed to help companies retain and rehire workers, also gave a significant portion of loans to businesses in industries that had not seen as many layoffs.
Food and accommodations workers, for instance, made up 24 percent of early unemployment claims, but only 9.5 percent of the businesses that received federal loans in Maine were in that industry.
By contrast, construction saw a bigger share of aid than any other industry, accounting for about 12.8 percent of the loans in Maine while making up 5.3 percent of early jobless claims. Seasonal factors partially explain those discrepancies. Some businesses hesitated to take on more debt when the federal government still was working out key details of the loan program.
After the loan program was passed in March, hospitality interests pushed for changes that were later adopted, including a longer amount of time for businesses to return to full employment. That was important in Maine, where the tourism industry relies heavily on seasonal businesses.
Steve Hewins, president and CEO of HospitalityMaine, an industry group of hotels and restaurants, said the program has nonetheless “softened what has been an incredible blow to the industry.”
Restaurants and hotels used the loan money precisely as the law required, which initially meant that 75 percent of the loan amount went to payroll, he said.
“Everybody that took out these loans expected them to be forgiven,” Hewins said.
But he said another federal program that gave an enhanced weekly benefit of $600 per week to those on unemployment, has complicated rehiring at restaurants because employees make more on unemployment than by returning to work. That is scheduled to expire on July 31, with Congress debating its merit.
Restaurants and lodging establishments mostly received smaller loans, with 864 full-service restaurants in Maine applying for close to $46.3 million in loans under $150,000. Another 366 limited-service restaurants applied for $15.29 million. Some 359 hotels and motels without casinos received $14.66 million in loans, while 126 bed and breakfasts got $2.6 million.
Determining the value of the larger loans was more difficult, as they were only disclosed in ranges from $150,000 to $10 million. However, 176 full-service and 39 limited-service restaurants received those loans along with 79 hotels and one bed and breakfast.
In the construction industry, many businesses were able to continue or resume economic activities earlier than those in other industries, since construction was considered essential and can more easily accommodate physical distancing compared to food or retail businesses.
Still, the industry lost 1,700 jobs in April, the first full month the pandemic restrictions were in place, said Matt Marks, CEO of the Associated General Contractors of Maine. Jobs were canceled or postponed, and construction workers filed 5.3 percent of unemployment claims that month. The industry saw slight job gains in May, which Marks partially attributed to the program allowing companies to keep workers on as they lost business.
Behind the construction industry in terms of the share of loans received were businesses in the “other services” category, which includes a range of businesses such as auto repair shops, hair salons, environmental organizations and religious associations. They got 10.2 percent of loans, followed by professional services, such as lawyers, accountants and veterinarians, at 10.1 percent of loans.
Health care and social assistance received 9 percent of loans despite accounting for 15.8 percent of early layoffs, while retail businesses received 9.7 percent of loans but accounted for 15.6 percent of job losses as of April.
The majority of Maine businesses received relatively small loans: more than 25,000 businesses, or about 90 percent of those receiving loans, got less than $150,000, according to Treasury data. Those businesses received a total of $740 million, while about 2,800 companies that received more than $150,000 accounted for the other $1.5 billion in loans.