Maine lenders report less demand for latest round of pandemic relief loans

Thousands of Maine small businesses have been approved for hundreds of millions of dollars in fresh Paycheck Protection Program loans under a revamped version of the program that some credit with preserving millions of U.S. jobs and preventing economic catastrophe last year.

But the scale of lending is far smaller this time around, partly because of stricter application requirements, other funding options and the recovery of some industries from last year’s economic shock, reducing their need for more government help.

“We thought there would be a little more of a surge (of loan applications),” said Renee Smyth, chief experience and marketing officer at Camden National Bank. “We are not experiencing that right now.”

In 2020, lenders issued more than 28,000 PPP loans worth almost $2.3 billion to Maine employers. National demand for the program was so intense that it ran out of money less than two weeks after it launched last April.

In December, Congress allocated another $284 billion to the program, which is intended to provide economic relief to small businesses and nonprofits that suffered revenue losses because of the coronavirus pandemic. It allows qualified employers to take out loans that can be forgiven – converted to grants – if they follow program rules that include spending at least 60 percent of the money on payroll.

More than two weeks since all eligible businesses were allowed to apply for the program’s latest round, about 4,700 loans worth $371 million have been approved for Maine employers.

“We were worried about the money running out and getting customers in on time, but that is not the case,” Smyth said.

Camden National was one of the largest PPP lenders in 2020, processing more than 3,000 loans worth almost $245 million. So far, it has made about one-quarter of that number of loans in the current round.

Restaurants, hotels, transportation services and entertainment industry employers, still struggling nearly a year after COVID-19 emerged in Maine, are major borrowers, Smyth said. Hospitality businesses can derive the greatest benefit because they can receive funding of up to 3.5 times their payroll, compared to 2.5 times for other businesses.

About 90 percent of Camden National’s newly approved PPP loans so far are “second draw” – additional funding for employers that received PPP money last year, Smyth said. Companies can apply for a second loan if they have 300 or fewer employees and show a revenue loss of at least 25 percent during any quarter of 2020 compared with the same period the year before.

Some companies that received a loan in 2020 might not meet the eligibility threshold for another, Smyth added. Professional services, medical firms, construction and other industries secured tens of millions in loans last year but may have since recovered from the confusion and fear that set in when the virus emerged.

“The sense of urgency isn’t there,” Smyth said. “We know so much more today – there is a different outlook than there was a year ago.”

Wright-Pierce, a Topsham environmental engineering firm, said it doesn’t need more government support. It secured a $3.8 million PPP loan last spring, uncertain how the pandemic would affect its business, said Executive Vice President Paul Birkel.

“We got the money and it sat in the bank,” he said. “From month to month, things were going well.”

Business stabilized, then improved, and the company hired four more people. By October, the loan was still untouched, and the company decided to return it.

“We just got to the point that we could not continue to hold onto the money. That was not what it was intended for – not to enrich owners and pay bonuses,” Birkel said. “Our outlook looks good. We don’t feel we are in a position to apply for additional funds.”

Some of the hardest-hit businesses during the pandemic aren’t applying for new PPP loans because they can now turn to another federal…