Shoppers comply with the mask regulations to help prevent the spread of the coronavirus at Bridgton Books, Friday, Nov. 13, 2020, in Bridgton. The federal Paycheck Protection Program is opening to businesses again on Monday. Credit: Robert F. Bukaty / AP

Small Maine financial institutions can start taking applications for a new round of federal business loans starting Monday, and while they expect fewer takers than earlier rounds last year, they anticipate many still-struggling businesses will opt for a second loan.

The $900 billion stimulus bill signed by President Donald Trump in December included $284 billion for a new round of federal Paycheck Protection Program loans, which have been a lifeline for businesses. Last year, Maine small businesses applied for more than 28,000 loans totaling close to $2.3 billion by August in the forgivable loan program championed by Maine Sen. Susan Collins in the first pandemic stimulus package in March.

Need has only increased for most businesses since the summer. More than 44 percent of Maine small businesses saw decreased revenues during the week between Dec. 28 and Jan. 3, a share that was higher than the national average amid a normally slower winter season and nearly double what it was in the second week of August, according to a Census survey.

But like the original rollout, which was fraught with delays and late changes that frustrated businesses and banks, the new rollout already is raising questions, including from financial institutions confused about when they can start taking loan applications.

New borrowers can apply starting Monday and those with current loans can apply starting Wednesday for a second loan. But new applications only became available on Saturday, and the U.S. Small Business Administration’s Maine office notified lenders Friday afternoon that only community financial institutions with less than $1 billion in average total assets over the previous three years could offer loans starting Monday. 

That leaves out most banks and credit unions, including Bangor Savings Bank and Camden National Bank, the two largest banks in Maine with assets of $6 billion and $5.2 billion, respectively. They will need to wait until later, possibly until Wednesday, to start offering loans. Microlenders and certified development companies such as Eastern Maine Development Corp. in Bangor and CEI in Brunswick can offer the loans starting Monday.

“The last time was like building the plane as we were flying,” Jim Donnelly, executive vice president and chief commercial officer of Bangor Savings Bank, said. “Now it’s more like trying to make the seating arrangements while flying.”

The bank approved 4,800 loans worth a total of $470 million in the initial paycheck protection program, about half of which have been forgiven so far. Donnelly said Bangor Savings expects fewer larger companies to apply for the second draw of loans because they changed their business models to cope with the pandemic.

But those that have depleted previous loans or reserves as the pandemic dragged on longer than originally expected are likely to apply, he said. More borrowers will likely be smaller businesses and sole proprietors. He expects a smaller average loan size at $75,000, almost half of the initial loans.

The new program includes safeguards to get money to the smallest businesses. It does not allow public companies, whose loans have been a source of controversy, to apply. It imposes stricter limits on businesses applying for a second loan, including allowing fewer employees and requiring companies to show a 25 percent loss in gross receipts between comparable quarters in 2020 and 2019.

“The more stringent loan criteria in this round really focuses the priority on the small businesses,” said Vanessa Madore, president of Maine Savings Federal Credit Union in Hampden, which expects to handle as many loans as last time after processing 235 of them totaling $4.2 million.

Customer inquiries so far have been from businesses seeking second loans, said Craig Garafolo, executive vice president and chief operating officer at Kennebec Savings Bank in Augusta. He expects anywhere from 25 percent to 50 percent of the volume of the first loans last year. The bank closed 650 paycheck loans worth a total of $57 million last year. More than half of those loans have been forgiven so far. Borrowers had to use at least 60 percent of the loans for payroll to receive forgiveness.

Camden National Bank is also expecting more demand for second loans, said Renee Smyth, the bank’s executive vice president and chief experience and marketing officer. The bank lent a total of $230 million in 3,003 paycheck loans last year, and so far 1,190 have been forgiven.

It is still not clear whether another paycheck round will be needed in a new stimulus that could come under the administration of President-elect Joe Biden.

“This round is a good step forward, but I don’t know what enough money for businesses would be,” Donnelly said.

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