Small employers across the state will get another chance for economic relief next week, when the U.S. Small Business Administration starts accepting applications for a new round of forgivable Paycheck Protection Program loans.

Some very small, community financial institutions were allowed to submit loan applications starting this week, but lenders with at least $1 billion in assets – which includes most banks in Maine – can start putting in loan applications Tuesday.

Hundreds of employers already have applied to Maine lenders that are waiting to submit loan documents when they are given access to the SBA’s portal for accepting them.

“There is certainly a need and demand for this Paycheck Protection Program round of funding,” said Jaclyn Fish, community relations manager at Bangor Savings Bank. “We have received over 2,000 inquiries in two days, many of them resulting in applications from new and second-round PPP borrowers, which is a higher response rate in these first few days than last round.”

The federal program, renewed as part of an economic stimulus package passed last year, can provide up to $284 billion in loans. Eligible businesses can receive funding even if they took out a loan last year during the program’s first iteration.

The Paycheck Protection Program provides qualified small businesses with loans that mostly must go toward covering employee pay. If a business follows the program rules, the loan will be forgiven, effectively converting it to a grant.

The program is credited with supporting roughly 250,000 jobs in Maine and tens of millions nationwide last year, at the height of the economic crisis triggered by the coronavirus pandemic. Employers in Maine received about 28,000 loans worth more than $2.2 billion from the program last year.

But paycheck protection has also been criticized for allowing well-capitalized firms to take out loans when small, Main Street and especially minority-owned businesses had a hard time getting assistance.

The latest round of loans has tighter requirements for employers. Applicants can only employ up to 300 workers – not 500, as in the first program. Employers also have to prove a 25 percent revenue loss in one quarter of 2020 compared with the year before. The previous program did not require evidence of business losses.

“This is really focused on small business owners,” said Kim Donnelly, director of business banking at Gorham Savings Bank. “I think the SBA learned that from the first round.”

Borrowers “have to meet those requirements to apply for round two, the funds are going to last way longer, and they have been appropriately structured to benefit small businesses,” she said.

Gorham Savings has accepted applications for new paycheck protection loans since the forms were made available and will submit them as soon as the lender portal opens Tuesday, Donnelly said.

So far, the bank has received a few hundred applications, but Donnelly expects that number to increase over the weekend. With new eligibility restrictions, she suspects the program will be funded enough to cover all eligible borrowers. When the first $349 million in loans was made available last April, the money ran out in less than two weeks.

“It is just not the frenzy it was, but it is definitely important,” Donnelly said.

Restaurants, bars, hotels and entertainment venues account for most of the borrowers looking for a new loan or a second loan, Donnelly added. The lodging, hospitality and entertainment industries have been battered by more than 10 months of poor sales and operating restrictions intended to curb the spread of COVID-19.

“Those types of businesses, absolutely, their capacity has been cut in half and people aren’t going out anyway,” Donnelly said.

Those businesses also get an added benefit from the new paycheck protection loans. The loans provide 2.5 times an employer’s payroll for use over eight to 24 weeks. But loans to restaurants, hotels and other hospitality businesses will amount to 3.5 times payroll, an acknowledgement of the industry’s unusual struggle.

Employers that received a loan last year can apply for a second one, but they have to show that they have spent the previous loan amount. Establishments need to spend at least 60 percent of the loan on payroll. The remainder can be used to cover essential costs such as rent, mortgage and utilities. New loans also can now be used to pay for protective equipment and other adjustments to conform with COVID-19 protection rules.

The new program also has a simplified application and forgiveness process for loans of $150,000 or less, easing the paperwork burden on borrowers. The maximum amount for a second loan is $2 million.

There is clear demand for another round of loans, said Renee Smyth, chief experience and marketing officer at Camden National Bank. Camden National, along with Bangor Savings, were the top two paycheck protection lenders in Maine, and the state’s strong community bank network is partially credited for the program’s success in the state.

So far, about 1,000 customers who received a loan last year have prepared paperwork for a second, Smyth said. She expects most of the bank’s 3,000 paycheck borrowers will qualify for a second loan.

“We estimate that a majority of our initial round will apply for this round of funding,” Smyth said.

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