Joe Walsh, founder and CEO of Green Clean Maine, a residential cleaning company, inside a customer's home. The company is now closed because his clients and staff feared the spread of the coronavirus. Credit: Courtesy of Emilie Sommer | Emilie Inc. Photography

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A federal loan program aimed at helping small-business owners stay afloat until they can restart may not provide as much relief as hoped.

The $350 billion Paycheck Protection Program, a centerpiece of the $2.2 trillion stimulus package passed last month, will guarantee loans to small businesses affected by the virus. Maine businesses have flocked to the program since it opened Friday, with more than 1,800 of them getting approval to receive a total of nearly $511 million as of Monday evening.

[Our COVID-19 tracker contains the most recent information on Maine cases by county]

But a provision on the loan amount that ultimately can be forgiven remains a sticking point for small businesses, a primary economic engine in the state comprising 56 percent of overall employees and 99 percent of businesses, according to the Small Business Administration.

Up to 75 percent of the loan and any accrued interest can be forgiven for payroll costs. However, the amount forgiven depends on how many employees the business has in the eight weeks after it receives the loan, according to the SBA.

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If it is able to rehire all employees it laid off within the eight-week timeframe, it can get the largest amount forgiven. The interest on the unforgiven portion of the loan that is not forgiven is 1 percent, which is much lower than conventional business loans that must be repaid more quickly.

That is why businesses are applying for the loans even though they present some problems for those that have closed or laid off most of their staff. Chief among them are those in the hospitality industry, many of which were among the first to close ahead of a statewide stay-at-home order issued by Gov. Janet Mills and could be among the last to reopen.

Joe Walsh, founder and CEO of Green Clean Maine, a residential cleaning service based in Portland, closed his business on March 18 as customers dried up and employees stayed home from work, both fearful of the coronavirus spread.

He said that fear could last for a while even after the curve of new coronavirus cases flattens and people are allowed to go back to work. He said his business is not likely to return to full employment by the deadline, meaning it will not qualify for full loan forgiveness.

“Businesses who have been able to remain open and at close to full capacity stand to benefit most,” Walsh said.

Walsh applied Monday for a $250,000 loan through Camden National Bank and has not heard yet whether it is approved.

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Isaac MacDougal, owner of the Cocktail Mary bar in Portland, opened last November and has three employees. He shut down on March 13 and applied for a paycheck loan through Bangor Savings Bank on Friday. Like Walsh, he cited concerns with the time it will take to restart his business and attract potentially hesitant customers.

“I have $300 available now for myself and the business,” MacDougal said. “I hope I don’t have to take out more than $10,000 in debt.”

Heather Sanborn, co-owner of Rising Tide Brewing in Portland, was approved for a loan over the weekend. She laid off 19 employees in the past two weeks, leaving only four plus the two owners. She also is worried that she won’t be able to staff up in the eight weeks after she gets the loan money, and thus will get less benefit from the forgiveness provision.

Both MacDougal and Sanborn said they hope the federal government will extend the timeline for businesses to get fully staffed. MacDougal said it could be six months instead of eight weeks. There could be votes in Congress as early as this week to add more funding to the Paycheck Protection Program as the money is quickly exhausted by businesses.

Walsh said the government could make a simple fix by letting small businesses choose the eight-week period within a window of several months. Other businesses are considering waiting until closer to the June 30 loan deadline to apply for the loan.

But with the rush of applications, Seth Balliett worries about getting left behind. The owner of Woodhull Public House restaurant in Yarmouth laid off 15 employees about two weeks ago. He contacted Bank of America and is waiting for a callback so he can fill out his application.

“They told me to not fill out the application and wait until I’m called and give answers then,” he said. “I’m concerned I’m missing the boat on this.”

Watch: Why the Maine CDC breaks down coronavirus cases by county, not town

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