After a wave of Maine small business owners have expressed frustration with the Paycheck Protection Program, U.S. Rep. Jared Golden and Maine Attorney General Aaron Frey are each calling for changes to the federal program to ensure that the state’s small business community can weather the pandemic.
Frey announced on Wednesday that he has joined a coalition of 24 state attorneys general, led by Massachusetts AG Maura Healey, calling for changes to the PPP to make sure “funds are distributed fairly and equitably,” according to a press release.
“Small businesses are the backbone of Maine’s economy, and they have been doing the right thing in following the advice of public health experts, often at an enormous financial cost,” Frey said. “It is important that aid to small businesses through the PPP is distributed fairly, transparently, and with appropriate flexibility and technical assistance in order to maximize its support of the businesses which are impacted.”
Co-created by Sen. Susan Collins and included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed at the end of March, the PPP was quickly drained of $369 billion in initial funding.
Despite the stated intent of helping small businesses, loopholes in the CARES Act have allowed large hotel and restaurant chains to tap into the program and receive large loans. Another round of COVID-19 relief passed by the U.S. Senate on April 21 included an additional $310 billion for the fund but did not close those loopholes.
So far, roughly 26,000 Maine small businesses have received funding from the program. However, many owners of small businesses, which account for 99 percent of businesses in the state and employ a majority of Maine workers, have raised concerns about certain requirements of the program, such as that 75 percent of the loans must be used to cover payroll expenses even if the businesses are closed.
The coalition of state attorneys general are demanding a host of changes to close the program’s loopholes and are asking that Congress require the Small Business Administration, which administers the PPP, to provide better guidance for lenders to ensure funding goes to small businesses instead of large, publicly traded companies. On April 23, the Trump administration issued new guidelines meant to prioritize businesses without market assets.
Rep. Golden, who serves on the U.S. House Small Business Committee, also shared his proposed fixes for the program on Wednesday. In a letter addressed to leaders in the U.S. House and Senate, Golden asked that any future COVID-19 relief legislation allow small businesses to use more of their loans for non-payroll expenses, as well as include language that clarifies which businesses will be eligible for loan forgiveness and what government entity will be making that decision.
The letter includes a series of quotes from Maine small business owners relating challenges they’ve faced with the PPP.
“We don’t need a short-term loan to keep staff and pay a few bills. We are not asking for a handout like the trillions that have gone to Big Business. We need-and I would argue deserve-a long-term zero interest ‘bridge’ loan to see us through the uncertainties of doing business in the new reality of the next 18-24 months until we have enough testing, vaccines, and treatments to bring back the faith of the American consumer,” reads a comment Golden shared, attributed to “River View Resort, Bethel.”
“I strongly urge you to address these issues in the next package of legislation to address the COVID-19 pandemic and its impact on small businesses,” wrote Golden. “Absent these changes, we undermine the potential of these programs and could make it harder for millions of small businesses to weather this challenging time.”
The letter was submitted a day after Maine small business owners held a virtual press conference hosted by state Sen. Heather Sanborn (D-Portland) and the Maine Small Business Coalition to discuss some of the issues they’ve had with the PPP, following a similar event on April 22.
Nationally, a new survey from Morning Consult found that 44 percent of respondents believe PPP loans were unfairly distributed, versus 20 percent of those who believe they were fairly distributed. The survey was conducted May 2-3 among 1,987 registered voters and has a margin of error of two percentage points.
Photo: Fore Street in Portland | Corey Templeton.
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