Ninety-seven percent of businesses in Maine have fewer than 20 employees, according to the Small Business Administration. Many operate on tight margins, even during good economic times. But now, as the pandemic and its effects linger, some of those small businesses are now being forced to shut their doors for good.
As part of our series Deep Dive: Coronavirus, Robbie Feinberg reports on business owners in one sector of the hospitality industry that are facing hard decisions.
Todd and Angie Eaton never thought they would open up a restaurant. But two years ago, when they saw an opportunity to buy a small family diner in Hermon — outside of Bangor — they took the plunge.
“We were driving by one day, we saw that it was for sale. We knew that it was a good location. So we figured we'd give it a shot and see what we could do with it.”
After some renovations, the restaurant, called the Just Down the Road Grille, opened in the fall of 2018. Quickly, Eaton says, it gathered a following. Regulars would show up for trivia, cornhole, and local music. Eaton says it was a place that made you feel at home.
“My favorite part was getting to join everybody on the other side of the table,” Eaton says. “Just interacting with them — the trivia. That was the fun part of it, the not-so-business part of it.”
But when the novel coronavirus arrived in Maine, everything came to an end. Eaton says the restaurant closed in mid-March. He explored offering takeout and applying for federal loans. But he says the options didn't make sense for his business. And after weeks of no income , on top of already slim profit margins, the decision became clear — it was time to close for good.
“We kind of knew immediately that it was going to hit us quick. And pretty hard. And we just, we rode it out as much as we could. But I would say, probably three weeks into it...we kind of knew that, where we stood, we didn't really have much of a chance to reopen.”
The Eatons are not alone. One recent national survey reported that almost 2 percent of small businesses said they had closed permanently because of COVID-19.
"There is no question that for every day that goes by, the threat continues and becomes more acute. And the probability of losing even more becomes apparent," says Maine State Chamber of Commerce President Dana Connors.
Last week the Maine Association of Chamber of Commerce Executives released a survey revealing that 16 percent of responding businesses said it was extremely unlikely that they could open this summer. Eight percent said it was extremely unlikely they would be open in a year.
“You also have to recognize that many [small businesses] don't have deep pockets,” Connors says. “They don't have those reserves that allow them to work through a period of challenge like this. They live more on the razor's edge, as we like to say. So that threatens them every day, every week, that it gets prolonged, it's possibly their business's existence.”
The federal government has offered support with its Payroll Protection Program (PPP), which provides short-term forgivable loans. The federal Small Business Administration says more than 25,000 Maine businesses have received more than $2 billion through the program.
Industry groups say the loans have been a lifeline for many, but not for all. Judy Boudman is the owner of two restaurants in Presque Isle — Café Sorpreso and Café Demoiselle. She says she considered a PPP loan, but quickly saw that specific requirements, including using only a certain amount of the funds on operating costs and bringing back all of her staff by the end of June, made that option unworkable.
“It was pretty scary at this point in our life to take on $50, $60,000 in debt. When we've never had debt. So that wasn't an option either,” Boudman says. “And that was a major factor in why we sort of decided to close down until things got better.”
Without income, Boudman had to consolidate both of her restaurants into one building to save money. Then, she says, her landlord decided to sell the property and asked her to leave.
HospitalityMaine President Steve Hewins says it is restaurants and hotels that could ultimately be most affected by COVID-19, particularly if the state's 14-day quarantine rule for out-of-staters keeps many from visiting.
“I think a lot of the damage being done to hotels and restaurants now is from the perception that Maine is closed,” Hewins says. “People would normally be booking now for July and August. They're not doing it. That's the biggest thing.”
The state says it is working with the industry to reexamine the quarantine rule and adjust it in a way that can protect both public health and business. And it has already made some changes, including loosening restrictions in several rural counties.
“In partnership with industry, and other states, and healthcare experts, I'm confident that we will find a solution that keeps people safe, and keeps businesses running,” says Heather Johnson, the state's Commissioner of Economic and Community Development.
But Hewins says that even with policy changes and new kinds of safety protocols, it's going to take a long time for the industry to rebound and for customers to feel fully comfortable heading out again. That is why some industry officials say additional federal assistance will likely be needed to ensure that Maine's small businesses can stay afloat.
This story is part of our series "Deep Dive: Coronavirus." For more in the series, visit mainepublic.org/coronavirus.
Originally published May 19, 2020 at 7:11 a.m. ET.