Fewer businesses appear to seek PPP loans as Maine’s economic recovery inches forward

(The Center Square) – The renewed Paycheck Protection Program funding appears to be drawing fewer applicants in Maine because of questions about new rules, issues within the SBA system and business owners wanting confirmation their first loan will be forgiven before taking out another, according to one business industry observer.

“The 25% reduction in gross receipts rule, some challenges in applying for a second if their first loan forgiveness application is being processed (SBA system issue), some [are] waiting to make sure their first loan is forgiven before applying for a second even if they qualify,” David Clough, state director for Maine’s National Federation of Independent Business (NFIB), told The Center Square by email. “Some just waiting, still considering whether to apply or not.”

The program has been a lifeline for many businesses, helping many reopen or be able to stay open. Still, many are uncertain about Maine’s near and long-term economic conditions. Clough said that for some businesses the glass is half full or better, and for others it’s half empty or worse, with recovery affecting businesses in different ways.

“Expectations last April were that the situation would last only a month or so and that the economy would bounce back quickly,” Clough said. “We know the forecast today is more accurate; some business sectors could be mostly recovered by year’s end but recovery in other sectors will lag into 2022.”

The state’s official economist forecast expects it could be several years before the jobs suddenly lost in 2020 can return, Clough said.

“The forecast has gone from cloudy with a chance of meatballs to partly sunny with a chance of scattered meatballs,” Clough said.

There are new programs designed to help small businesses. Clough noted the Consolidated Appropriations Act broadened the eligibility for the Employee Retention Tax Credit, but many small employers may not know about it.

Small businesses will continue to be impacted by the pandemics’ economic conditions for many months.

“Even after all the emergency public health protection orders are lifted, it will take time for businesses to recover financially, and customer support of local businesses will be crucial,” Clough said.

“Avoidance of new expenses imposed by politicians in Augusta and Washington, DC, also will be crucial,” Clough said. “More labor costs, higher taxes and additional regulations will have greater consequences for small businesses because their financial resources are very strained and the ability to manage the future very uncertain.”

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