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Small Businesses in Portland “Thrown to the Wolves”

by | Apr 17, 2020

A desolate daytime scene in downtown Portland this month. photo/Bob Bergeron

UPDATE: In response to massive public pressure, the Portland City Council announced at 12:40 p.m. today that it will hold an “emergency remote workshop” on Monday, April 20, at 5:30 p.m., to “clarify its rules” regarding new limits on “non-essential” businesses in the city. In the meantime, according to Portland City Manager Jon Jennings, those businesses will be allowed to ship items, and provide “no-contact” delivery and curbside pickup. More information on the workshop, including info to log into the session, is at http://www.portlandmaine.gov/129/Agendas-Minutes.

It’s now come to this: shop owners in the heart of Maine’s largest city are openly wondering how they’re going to eat this month. And no one — Democrat, Republican or independent, at the city, state or federal level — has a good answer to that increasingly desperate question.

Meanwhile, people are beginning to crack under the mounting social, emotional and financial pressures of surviving the COVID-19 pandemic, resulting in serious injury, violence, burglaries and death.

On April 10, early in the afternoon, a man bought gas at the 7-Eleven on Congress Street, then doused and ignited himself at the store. He suffered serious burns “over a significant area of his body,” according to police.    

Two days later, also early in the afternoon, a 25-year-old man suffering what Portland cops called “some type of mental health crisis” began stripping off his clothes while walking with his girlfriend on Marginal Way. He then assaulted the woman, knocking her unconscious, attacked a bystander who’d tried to intervene, then jumped into frigid Back Cove. It took rescue personnel nearly a half hour to retrieve his unconscious body from the water, and he later died at the hospital.

Social-media posts and other anecdotes indicate that there’s been a rash of burglaries downtown in the past 30 days, including break-ins at Flask Lounge, the popular nightclub on Spring Street, and Novare Res, the craft-beer mecca in the Old Port, where the intruder(s) or others also defecated on the property.

But those misfortunes are minor compared to the economic havoc being inflicted upon small-business owners by their own government. Unless a massive financial relief effort is undertaken in the next two weeks, it seems likely that scores or hundreds of private enterprises and nonprofits in the Portland area will go under when rent comes due on May 1.

At the federal level, the government’s programs have proven to be way too little and far too late.

The Economic Injury Disaster Loan (EIDL) program launched in mid March by the Small Business Administration (SBA) broke down within days under a crush of applications. Applicants were then promised, in writing, an “expedited” grant of $10,000 — regardless of the size of their business or whether their loan was approved — to be delivered within three days of submitting their paperwork. That timeframe was blown off, and the SBA subsequently slashed the grant to $1,000 per employee, effectively reneging on up to $9,000 in aid pledged to the smallest enterprises.

When Congress passed the CARES Act in late March, a group of four senators, including Maine Republican Susan Collins, shunted nearly all the aid for small businesses into a new initiative called the Paycheck Protection Program (PPP). The rollout of the PPP was a train wreck. Lenders lacked guidance from the SBA and were wary of issuing loans on unclear terms. Business owners were shut out from the program because they lacked a pre-existing relationship with SBA-approved banks and credit unions. The $349 billion earmarked for the PPP ran out on April 15, less than a week after self-employed people and independent contractors were eligible to apply. Efforts to pump another $250 billion into the program have stalled due to partisan gridlock in Washington D.C.

Even entrepreneurs who qualified for or received PPP loans are more distressed than relieved by this relief program. In order for the loan to be forgiven, recipients must spend at least 75 percent of the funds on payroll. But as local business owners like Joe Walsh, owner of Green Clean Maine, have pointed out, the terms of the loan require employers to rehire most of their staff during a period when they are still prohibited, by law, from operating.

During an April 16 interview broadcast on National Public Radio, Walsh noted that accepting a PPP loan will put his nearly three dozen employees in a bind. If they agree to go back on his payroll, they’ll earn less than they’re collecting through state unemployment, which has been bolstered by a $600-per-week federal contribution. If they refuse to be re-hired, they’ll lose their unemployment benefits. But the only way for Walsh to use the quarter of the PPP loan designated for non-payroll expenses, like rent, and not have to pay that money back, is to get most of his staff back on the books — even though they can’t legally work for him until a future date that no one can predict.           

At the state level, the economic response to the crisis has been even weaker. Like the SBA, Maine’s unemployment system was quickly overwhelmed last month by the demand for assistance. Self-employed people, contractors, “gig workers” and freelancers, who were made newly eligible for unemployment benefits thanks to an amendment to the CARES Act pushed by Sen. Bernie Sanders, haven’t gotten a dime from the Maine Department of Labor, because its system lacks the software necessary to process their claims. The state has been unable to even provide an estimate as to when those workers can apply for benefits.

Finally, this week, the city of Portland stepped in and effectively stepped on the neck of any “non-essential” businesses still attempting to operate. At its April 14 meeting, held remotely via video, the City Council tightened restrictions on most retail shops and small manufacturers, prohibiting curbside pickup at their locations and banning employees from working on site even if they stay six feet away from one another.

The most controversial of the new restrictions is the prohibition on shipping products by mail or private delivery — a ban that big competitors like Amazon do not need to heed. Portland’s order (which is more restrictive than the state’s limitations) restricts owners’ activities at their place of business to “simple administrative functions” like “processing mail … depositing checks, completing payroll, and paying vendors.”

In other words, proprietors of those businesses can pay bills, but cannot earn money to pay those bills by sending or handing goods to customers, or even leaving an order outside their door for pickup.           

“To my knowledge, no other municipality in the country is asking retailers to shutter all operations. It’s a death warrant for businesses,” Erin Kiley, co-proprietor of the downtown second-hand shop Portland Flea-for-All, wrote in an open letter to city officials. “Similarly, the state isn’t saying individuals can’t use the post office, so there’s no reason businesses shouldn’t be afforded the same rights. There’s no evidence that maintaining delivery or shipping operations poses a greater risk than operations that have been deemed ‘essential’ across states and municipalities. There have also been no efforts to limit interstate shipping or delivery from large retailers, so why are small businesses being punished here?”

Michelle Souliere opened The Green Hand Bookshop on Congress Street in 2009. “I also would like to know how the City of Portland is ready to step in and assist its struggling small businesses and sole proprietorships, which are the backbone of Portland’s vaunted creative economy,” she wrote in her April 16 letter to city leaders, which she shared with Mainer. “We have no access to unemployment, and the promised grants and loans are nowhere to be seen. How are we to buy groceries? Pay the rent our commercial landlords are still charging us? Pay the rest of our bills?

“Many of us were already stuck in a position where we were making the best of it, sole proprietors singlehandedly scrambling, working unpaid overtime to generate time-intensive mail orders that we then had to struggle to get packed and out the door to maintain even a crumb of our normal incomes, all while maintaining CDC sanitary guidelines,” Souliere continued. “But even though we were working exponentially more to make substantially less money, we said, ‘It’s better than nothing.’ ‘We don’t want to be a burden on the system.’ You decided in one fell swoop to throw us to the wolves, the wolves of hunger, Portland’s wolfpack of greedy landlords, and the ceaseless maw of deeper-than-ever debt.”

Among the businesses deemed “essential” by city and state officials are those selling alcohol, medical marijuana, and firearms. Restaurants can continue to offer curbside pickup and delivery. You can buy a lottery ticket and a pack of Camels in Portland’s Arts District, but not a book or a blouse or any actual art.

“If ‘essential’ taco joints and liquor stores can stay open for ‘touch free’ delivery, small shops should be able to ship goods and shop owners should be able to be in their shops alone doing whatever they can to keep their businesses relevant and above water,” a third downtown Portland business owner remarked in an off-the-record message to Mainer.

Perhaps there is a method to the city’s madness in this regard: a strong drink and a big gun will come in handy when the actual wolves arrive.

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