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Gov. Janet Mills detailed the struggles of Maine’s small businesses to the federal government on Friday in a letter seeking access to low-cost federal loans for the state’s business owners.
The letter offers a glimpse into how Maine businesses have been hurt by the spread of the new coronavirus disease, known as COVID-19, which has triggered event cancellations, the temporary shuttering of businesses and a historic stock market selloff.
Mills’ letter includes first-hand descriptions from 14 Maine small businesses, which provide an anecdotal look at the economic harm caused by the early phase of the pandemic in Maine.
All 14 of the small businesses “have suffered substantial economic injury as a result of the disaster and are in need of financial assistance not otherwise available,” Mills wrote in her letter.
On Monday afternoon, the U.S. Small Business Administration responded to the letter by declaring Maine eligible for its economic injury disaster loans. Maine small businesses and nonprofits will have access to up to $2 million in financing at between 2.75 and 3.75 percent interest with terms up to 30 years.
The loans can be used to “pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact,” according to the U.S. Small Business Administration. Congress has earmarked $7 billion for the fund.
Maine was one of the first states to submit its request for eligibility, which could give Maine small businesses a head start in securing the funds, said Heather Johnson, commissioner of the Maine Department of Economic and Community Development.
Small businesses employ 56.5 percent of Maine employees, according to the U.S. Small Business Administration.
While Mills wrote that many Maine businesses were suffering because of the effects of “social distancing,” the filings show the pandemic’s impact is not limited to businesses that depend on public gatherings or face-to-face interactions with customers. The businesses highlighted include firms from the manufacturing, contracting, farming, hospitality and medical industries.
“There are no orders coming in and I have rent and loans to pay,” wrote Susan Shaw, CEO of Pussums Cat Company, a catnip products manufacturer based in Turner. She laid off all 14 of the independent contractors she used and doesn’t anticipate being able to take a salary going forward, she said.
Shaw wrote that revenues between the beginning of February and last Friday were down nearly 70 percent compared with the same time last year.
Members of Maine’s tourism industry in the filings expressed fear that the tourist season may be imperiled. “We are hoping that we will have a summer season,” wrote Cathy Stackpole, executive director of the nonprofit Ferry Beach Park Retreat and Conference Center in Saco.
“We had a full spring of events that are all being cancelled,” Stackpole wrote. “We have a couple of months of funds, but not enough to keep everyone.”
The governor wrote in her letter that many Maine restaurants are now “empty” and that businesses reliant on tourism are experiencing an “unprecedented” number of cancellations and vacancies.
The owners of Pilgrim’s Inn on Deer Isle concurred.
“Bookings are down significantly,” wrote Nicole Neder, the inn’s co-owner. “We expect to see more cancellations as we get closer to high season. Projected outcomes are not good.”
On Monday, Portland announced a curfew aimed at bars and restaurants. Several states and cities around the country have also mandated bars and restaurants close to help control the spread of the virus. But even before those requirements, the owners of Bath Brewing Co. said in their filing that “customers are beginning to self quarantine,” and, as a result, the company’s revenues are down significantly.
Also in her letter, Mills pointed out that Maine small businesses are not immune from global supply chain disruptions.
For example, Todd Smith of Maine Fire Equipment Company in Skowhegan said “inventory [is] not available.”
Greg Boyd, CEO and president of Alternative Manufacturing Inc. in Winthrop wrote that he anticipates revenues to be down 40 percent from last year due to supply chain interruptions “for material manufactured and shipped from China.” He also wrote that he could have to lay off as many as 14 of the firm’s 74 staff. Vice President Scott Story told the Bangor Daily News the information submitted to the state “represented a worst-case scenario” and that it “does not represent any immediate or anticipated actions in the near term.”
But it’s not just supply chain issues that are hurting manufacturers. Demand has also plummeted, according to the filings included with the governor’s letter.
Farmington-based Origin USA, a manufacturer of apparel, nutrition products and combat sports gear, wrote that it anticipated a decline in its anticipated growth projections by 70 percent for the year. Company leaders told the Bangor Daily News that that figure represented a worst-case scenario, which they did not anticipate happening, and that the projected loss was for a portion of its business. Before the virus began to spread, the company projected “aggressive” growth this year, said Amanda Roberts, the co-owner.
Watch: Symptoms of the coronavirus disease