According to a new report from the Associated General Contractors of America (AGC), the federal government’s Paycheck Protection Program is allowing construction firms to add and retain employees, despite declining demand for work.
“A large share of construction firms promptly received loans funds under the Paycheck Protection Program, enabling many of them to hire or retain employees despite a surge in project cancellations,” according to the report.
AGC noted that the job-saving measure appeared to be working, but it cautioned that longer term recovery measures, such as new infrastructure funding and establishing a recovery fund, are needed.
“Most contractors report they have applied for the new federal loans, which are intended to enable small businesses to keep employees on their payrolls,” said Ken Simonson, AGC’s chief economist. “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.”
Simonson noted specifically that 44% of the 849 firms responding to the survey reported having already received funds, which began on April 3. Another 15% said their applications had been approved, but they had not yet received funding. Another 8% were awaiting a reply to their applications, and 7% had applied, but were told that no more funds were available.
Partly because of the loans, 13% of respondents said they had added workers.
“Although the loan program has helped, it will cover only a limited part of company expenses and is not enough to offset the huge drop in projects,” Simonson said.
He noted that half of the respondents reported clients have ordered halts to projects that were already underway, and more than 25% reported that clients have canceled projects that had been expected to start as far out as June, or even later.