A large share of firms promptly received loan funds under the Paycheck Protection Program (PPP), enabling them to retain employees despite a high number of project cancellations, according to a new survey released by the Associated General Contractors of America (AGC). While many firms surveyed by the AGC were able to secure funding from the PPP or have applications approved, the program, originally allocated $349 billion, ran out of money within the first two weeks. The Senate and House of Representatives passed legislation last week to allocate an additional $310 billion for the PPP to help meet the strong demand for the program.
"Most contractors report they have applied for the new federal loans, which are intended to enable small businesses to keep employees on their payrolls," AGC chief economist Ken Simonson said. "This program has already delivered funds to nearly half of the survey respondents, and many of them have already brought back furloughed workers or added employees, even though more clients are halting and canceling projects."
Forty-four percent of the 849 responding firms reported they had applied for and received funds through the PPP and another 15% said their applications had been approved but they had yet to receive funds. Partly attributable to the loans, the AGC survey found 12% of respondents added workers in April.
Despite firms receiving funds, Simonson said the loans will cover only a limited part of company expenses and are not enough to offset the huge drop in projects. Half of the respondents to the survey, conducted between April 20 and April 23, reported clients had ordered a halt to projects underway and one in four reported clients canceled projects that had been expected to begin as far out as June or later. Over two-thirds of respondents said they had encountered project delays or disruptions and around 50% said suppliers had notified them that deliveries would be late or canceled.
