Small businesses struggling to pay employees and expenses may get some relief from a $200 million grant program that Gov. Janet Mills unveiled Thursday.

The Maine Economic Recovery Grant program will provide up to $100,000 to Maine-based businesses and nonprofits with up to 50 employees. Small businesses were hit hard by a state-mandated shutdown this spring and subsequent restrictions that have helped curb the spread of COVID-19 in Maine, but led to low sales and cautious customers.

“Those small businesses are truly the backbone of our economy and the lifeblood of all our communities,” Mills said in a news conference Thursday. “We can’t let them fail.”

Business groups applauded the grant program but expressed concern that $200 million may not be enough to help hurting employers survive over the long term, especially as Maine moves out of high summer and into an uncertain autumn and winter.

“This is a really good start, and it targets the businesses that have been the most impacted and those that are small and Maine-based,” said Mary Alice Scott, executive director of Portland Buy Local, a merchant group focused on Portland.

In a recent poll of 91 of the group’s members, about one-third said their revenue has been no more than 20 percent of what they usually generate. Earlier aid packages such as the federal Paycheck Protection Program concentrated on payroll and limited spending on overhead expenses, which can be high for small employers in cities such as Portland.

“This is a great opportunity for businesses to take a little worry off their minds,” Scott said of Mills’ grant program.

Companies can start applying for grants on Friday. The deadline for submissions is Sept. 9, and awards will be made in early October. Grants will not be awarded on a first-come, first-served basis, so there is no rush to apply as long as it’s before the deadline. The program is funded with the $1.25 billion available to the state through the federal CARES Act.

To receive a grant, each business must demonstrate a need based on lost revenue because of the pandemic or the related public health response, according to the state Department of Economic and Community Development. Grants will be distributed based on losses from January through June as a pro-rated percentage of total losses resulting from the pandemic reported by all qualified applicants over the same period, according to department guidelines.

Funds can be used to cover payroll and expenses such as rent, utilities, some inventory and costs associated with reopening, such as personal protective equipment, among other costs. The grants are taxable and may be subject to audit, the economic development department said.

Mills acknowledged the program’s limits Thursday.

“While we know these grants cannot wholly replace or repair the economic damage this pandemic has caused, our mission is to ensure that each dollar has at least a small, direct impact on supporting these businesses and Maine’s economy,” she said. “We continue to hope that Congress will step up and provide greater relief to the people and state of Maine.”

Steve Hewins, president and CEO of trade group HospitalityMaine, said the program is encouraging, but he is concerned that it leaves out the struggling restaurants and hotels that have more than 50 employees.

“If you think about a restaurant operating with multiple shifts, it’s easy to get to 50 employees,” Hewins said. “We have to be happy it is out there, and it’s a start. We’re hopeful for another round of money coming before year end.”

A coalition of groups including HospitalityMaine and the Maine Tourism Association in June put forward an $800 million bailout plan for the state’s tourism industry. The Governor’s Economic Recovery Committee last month proposed a $350 million emergency grant program for employers.

“The majority of our members were shut down for at least a month, operated at less than half their capacity for months, or had to delay their seasonal openings,” Tony Cameron, CEO of the Maine Tourism Association, said in a statement. “We fear that many businesses may not survive until a second round of possible federal funding is added to the state’s grant program.”

More federal funding may not come anytime soon. Last week, Senate Majority Leader Mitch McConnell of Kentucky sent senators home until early September after negotiations fell apart between House Democrats and the White House over a proposed new aid package.

The grant program is an initial investment with the potential for added funding in the future, depending on additional support from the federal government, the Mills administration said in a news release. To date, the administration has committed $807 million of the $1.25 billion awarded to Maine in CARES Act funds, including $8.5 million to support child care services and $270 million to refill the state’s depleted unemployment trust fund, it said.

“COVID-19 has created an unprecedented financial crisis for businesses and nonprofit organizations in Maine and all across the country,” DECD Commissioner Heather Johnson said in a statement. “This grant program is the first step in supporting businesses and nonprofits with a path forward until they are able to rebuild capacity.”

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