As Congress prepares another round of support to small businesses worth hundreds of billions of dollars, some Maine companies say more help is needed.

The U.S. Senate on Tuesday passed a $480 billion package that includes $320 billion for the Paycheck Protection Program, or PPP, a U.S. Small Business Administration vehicle that delivers forgivable loans to companies with 500 or fewer employees to keep workers on the payroll and cover expenses until normal business can resume. The new bill includes $60 billion especially for small banks and credit unions.

But the program has come under fire because large restaurant chains and publicly traded companies were able to get millions of dollars in forgivable loans. Thousands of small companies that applied were shut out when the program ran out of its initial $349 billion in funding last Thursday.

Edward Lechner, owner of Shelby Shoes, a 40-year-old business in South Portland, was approved for a loan on Wednesday, but still doesn’t know when the money might come through. Lechner doesn’t blame anyone – the system is overloaded, he said.

Shelby Shoes shut its doors five weeks ago when Gov. Janet Mills ordered nonessential businesses to close to the public. Since then, Lechner has been doing what business he can online, over the phone, and even delivering to people’s homes.

He’s managed to pay his four employees through a line of credit with his bank. If the loan comes through, it will allow him to make payroll and help pay rent and vendors.


“We’re digging a hole deeper and deeper,” he said. “I had a perfect credit history for my whole life, but not anymore. What I am holding my company’s money for is to keep our employees. I can’t have someone who has worked here for 40 years and not pay them.”

Almost 15,000 Maine businesses were approved for PPP loans, amounting to nearly $2 billion, through April 16, according to the SBA. U.S. Sen. Susan Collins’ office released a higher estimate Tuesday of nearly 17,000 Maine small businesses receiving a total of $2.24 billion. Collins’ office said its numbers for Maine are more up-to-date than the SBA numbers.

Some business owners lucky enough to receive a loan feel they are stuck in a bind. The PPP is meant to cover payroll and some operating expenses for eight weeks. But companies have to start spending the money as soon as they receive it and rehire their full workforce within a timeline that now seems unrealistic.

“To say we are going to be back to 100 percent of operations at eight weeks is laughable at this point,” said Andrew Volk, co-owner of Portland Hunt and Alpine Club bar on a Wednesday conference call hosted by the Maine Small Business Coalition, a liberal advocacy group affiliated with the Maine People’s Alliance.

Businesses have to spend 75 percent of the loan on payroll and can use 25 percent to cover certain expenses. If they do not meet the guidelines, the loan forgiveness is adjusted and the loan must be repaid at 1 percent interest on a pro-rated basis, Collins office said, noting that employers may repay any portion of the loan at any time without a penalty.

Businesses said an extra $600 per week in federal unemployment benefits granted under the CARES Act, passed in late March, makes it difficult to rehire workers. Employees who are already laid off receive more compensation from unemployment benefits than some businesses can afford to pay them to stay at home.


But if those businesses hire them back, the workers could lose special pandemic unemployment eligibility if they are laid off a second time, said Birch Shambaugh, owner of Woodford Food and Beverage restaurant in Portland.

“I can’t imagine the intent is to remove employees from the safety of the existing unemployment insurance without them knowing if they will be entitled to it again,” he said.

Business groups including the National Restaurant Association have asked for more spending flexibility in the loans and an extension of the rehiring deadline.

The updated Senate bill includes no changes to the timeline or restrictions on the use of the funds, said Anne Zimmerman, national co-chair of Businesses for Responsible Tax Reform, a left-leaning national advocacy group, on the Wednesday call.

“There does not appear to be any language relaxing the forgiveness part at all,” she said.

Some loans may not have been processed on a first-come, first-served basis and were instead prioritized for the largest loan amounts – up to $10 million, Zimmerman said. According to SBA data, nearly three-quarters of loans were for less than $150,000. But 30 percent of program funding went to borrowers who took out $2 million or more.


Even though Collins “would have liked to provide more flexibility for seasonal employers and their workers, in this highly partisan era, it wasn’t possible in this package,” said Annie Clark, her communications director.

Collins co-authored the Paycheck Protection Program, which was included in the CARES Act. Maine employers were approved for an average of $134,000 through the program, suggesting about 12 employees per business, Clark said.

Individually owned franchises of national hotel and restaurant chains qualify for the program, but those with a large corporate structure on top do not, she said.

“American workers should not be deprived of their paychecks and jobs simply because they work for a franchise that otherwise qualifies for a PPP loan,” Clark said.

Some small businesses may be left out of the program altogether.

Dani Nisbet, the sole proprietor of Belissimo hair salon and a home and apartment staging company in South Portland, was encouraged in initial conversations with her bank. But two days ago, she was told that because she is registered as an S corporation, meaning she reports her business income on her individual tax return, she is ineligible for assistance.


“We pay our taxes just like everyone else,” Nisbet said. “I feel like we are being discriminated against because of the way we file our taxes, even though we pay as much as anyone else.”

Now she’s back to square one and worried that her tax status also will disqualify her from expanded unemployment programs. Nisbet, a founding president of South Portland Buy Local, said she is in touch with more than a dozen other businesses in the same position.

Collins’ office said S corporations are eligible for PPP loans, but some banking experts say the way many S corporations report their taxes is incompatible with the PPP criteria, which base loan eligibility on a company’s net income when there are no employee payroll records. S corporations in which the owner is the sole employee often don’t report payroll numbers and have little to no net income.

“If we can’t get PPP and we can’t get unemployment, you are going to see the landscape of Main Streets around here change very very quickly,” Nisbet said. “This is pretty scary.”

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