When there’s no place to go, people don’t spend a lot of money buying new dress shoes, Edward Lechner said Monday.

Lechner, the owner of Selby Shoes, Etc. in South Portland, said the restrictions put in place to slow the spread of COVID-19 have quashed retail businesses, and he will be lucky if his 2020 sales are 50 percent of what they were in 2019.

Joe Capozza of Capozza Tile and Flooring Center in Portland, used the federal Paycheck Protection Program to help his business. Shawn Patrick Ouellette/Staff Photographer

Lechner’s business, with its five employees, is among the more than 27,000 Maine businesses that received forgivable loans worth almost $2.3 billion from the federal Paycheck Protection Program put in place by Congress in April to help employers keep workers paid, even when there was little work to do. The $60,000 Lechner’s company received went exclusively to covering his payroll costs. Without it, he would have been faced with the unthinkable, laying off loyal employees, some of whom have worked for him for more than 40 years.

Senate Republicans began releasing portions of a $1 trillion proposal for another round of economic relief Monday, including a bill sponsored by Sens. Susan Collins of Maine and Marco Rubio of Florida that allows businesses to apply for another PPP loan if they have fewer than 300 employees and saw revenues fall by 50 percent or more.

The bill also would expand forgivable expenses to include investments in equipment or fixtures needed to protect employees and customers and give seasonal employers more flexibility in calculating their loan amounts.

The future of the proposal awaits negotiations with Democrats, who favor a bigger relief program.

Lechner said Monday that if any additional help was to come from Congress he would welcome it, adding that the forgivable loans he and others received still feel “like something out of the Twilight Zone.”

Lechner said his business, once on solid financial ground, is still teetering, with sales slow and not much hope on the horizon. Beyond the PPP funding, Lechner said he’s leveraged additional debt to keep his workers on the clock, but also said he wonders how, at 72 years old, he will ever be debt-free again. It’s a heavy burden for the family-owned businesses and one he doesn’t want to pass on to his children.

“We are struggling still,” he said, “I feel like I’m in a canoe with a hole in the bottom and bailing water constantly.”

Larger companies, including Portland-based Cozy Harbor Seafood, the state’s largest processor of lobster meat, also kept workers on the job through the COVID-19 pandemic, in large part because of the PPP program.

The seafood processor currently employs about 85 full-time workers, said John Norton, founder and president of the company, which has been in business since 1980. Norton’s company received between $1 million and $2 million in PPP loans, based on information released by the Small Business Administration this month.

Norton said the current physical distancing requirements mean there are fewer workers inside the processing facility, decreasing production at a time when demand has shifted, from restaurants and cruise ships in the hospitality industry to grocery chains and other food retailers.

“People still have to eat,” Norton said. “And fortunately people still like to eat lobster.”

Still, he said, the price of the lobster his company processes is down 40 to 45 percent from what it was before the pandemic. Compounding Maine processors’ woes are their Canadian competitors, who have the advantage of the federal government subsidizing their labor costs by 75 percent – a policy that will stay in place through the end of 2020, Norton said.

If another round of PPP funds or a second wave of forgivable loans or additional grant programs become available, Norton said his company would definitely consider applying again.

“Is there anybody saying they wouldn’t?” he asked.

He expressed gratitude for the PPP program and the work that Collins did to help push it through Congress, and said additional support or a renewed loan program would ease some concerns. But his outlook for the future remains fairly flat.

“I think my outlook would be what it is for most any business these days,” Norton said. “We’ve gotten this far, but we still don’t know what the future is going to look like.”

Those who have been critical of the PPP, including Adam Zuckerman, director of the Maine Small Business Coalition, a liberal advocacy group affiliated with the Maine People’s Alliance, said they hope the next package of relief for small businesses is fashioned more as a grant than a loan program. Zuckerman said his organization also favors expanding so-called employee retention tax credit programs that allow up to 50 percent tax credits for the wages employers pay out.

He pointed out that many small businesses in Maine found it difficult to access PPP funding until the program was altered to increase flexibility.

Now Zuckerman’s coalition is worried about a push by conservative lawmakers to include corporate immunity from any COVID-19 related damages in any new relief package. He said many small businesses fear that would reduce accountability for large companies, which may then be less serious about safety precautions meant to protect workers and customers from the virus.

“Small businesses are losing money, too, but most recognize we are going to lose lives if we reopen too quickly,” he said.

Other recipients of PPP loans said the program did what it was intended to do, giving them a bridge over a very rough financial time, while allowing them to keep their workers on the payroll.

Joe Capozza, owner of Capozza Flooring and Tile in Portland, said he went from 56 to 42 workers at his four showrooms, which were shuttered during the first weeks of the pandemic. PPP funds allowed him to bring all 56 back, and now his staff is at 58 workers total.

Capozza said his residential business plunged, but he was able stay afloat on commercial sales, which make up about 65 percent of his business. Residential sales in July are starting to make up for the losses of May and June, and that his business, which was down by about 20 percent, now looks like it might end the current fiscal year down just 8 percent from 2019.

“So (PPP) set us up really well to weather a storm,” Capozza said. “Instead of having to shut down entirely we were able to keep everything afloat during the worst of it and hit the ground running when we could.”

However, uncertainty about the trajectory of the virus and the pandemic are far from over and he worries about what lies ahead.

“The unknown of the fall is really the thing that keeps me up at night,” he said. “It’s a finish line you can’t really see.”

 

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