Editorial: Paycheck Protection Program needs more thought

The federal Paycheck Protection Program established through the CARES Act passed by Congress last month is meant to be a lifeline for small business, but the reality is that is does not meet the needs of many sectors of Maine’s economy.  

Designed to pay a full slate of employees for eight weeks, the PPP starts as a low-interest loan but converts to a grant (or a forgivable loan) if a business owner meets all the criteria set forth by the Small Business Administration, which implements the program 

The only problem is that the rules, especially surrounding the specifics of forgiveness, are not completely clear 

According to the SBA, a business must use all the money it receives to cover payroll and overhead costs in the eight weeks after the funds are received even if the business is not open and employees are not actively workingThe program was designed to keep people off the unemployment rolls, but thanks to the boost given to the unemployment system that raised compensation by $600, some workers are finding that collecting unemployment is more profitable than their current day job.  

As it stands now, total forgiveness is only met if an employer can fully restore employment and salary levels for any staffing changes made between Feb. 15 and April 26 by June 30.  

But what ia business cannot open eight weeks after the funds are dispersed? Or what if there isn’t enough business to justify full staffing levels? Would employees go back on unemployment? Is there a second wave of unemployment that looks worse than the first? 

In Maine, a large portion of the economy, especially along the coast and in the mountain areas, is seasonal and operate in a much different way than a year-round business. In Bar Harbor, for instance, many businesses have yet to open for the season and therefore unlikely had employees on payroll between Feb. 15 and April 26.  

And what about existing businesses that see their employees retire or leave for personal reasons during that period? Is their loan not forgiven because their payroll level changed through no fault of their own? 

When the economy in Maine will reopen fully is anyone’s guess, and, even when it does, it is doubtful that it will return to normal for tourist-dependent businesses that rely on a seasonal influx to fill hotels, restaurants and concert venues at maximum capacity. Many seasonal businesses make their entire year’s revenue between Memorial Day and Indigenous Peoples’ Day and if that is disrupted it will be difficult to imagine how those businesses move forward through the next year. 

While a safety net is needed now more than ever for Maine’s 145,000 small businesses and its 285,000 employees, Congress needs to revisit the program and adjust the rules so it meets the actual needs of all it aims to help. 

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