By Greg Ellison

East Coast Construction, 5 Star Plumbing, Heating use money to retain staff

(May 14, 2020) As numerous enterprises flirt with economic disaster during the covid-19 pandemic, the Small Business Administration’s Paycheck Protection Program has kept two small business owners in Ocean Pines fiscally sound.

East Coast Construction owner Dale Christensen was able to maintain operations after receiving close to $100,000 through the Small Business Administration’s Paycheck Protection Program.

Christensen said the low to no-interest loan has enabled his dozen employees to keep earning and avoid the unemployment rolls.

“We didn’t want to let our people go, we wanted to keep everybody working,” he said.

Congress released $349 billion on April 3 for the first round of PPP funding, following the March passage of the Coronavirus Aid, Relief and Economic Security Act.

The financial relief has also assisted West Ocean City based 5 Star Plumbing Heating & Cooling, with owner Joe Magnolia able to bolster staffing levels after initially laying off four of 15 employees during the pandemic.

“We applied for the PPP right away and we ended up getting it about two and a half weeks ago,” he said. “We’ve already used it for two payrolls.”

Ocean Pines Chamber of Commerce Executive Director Kerrie Bunting said the initial PPP funding, and a subsequent allotment, were both quickly depleted.

In response to the inability of many businesses to initially access the loan program, on April 23 Congress approved a second round of funding, including $310 billion for PPP, $75 billion for hospitals, $25 billion for covid-19 testing and additional funds for the Economic Injury Disaster Loan program.

“We knew it was going to go fast because so many people got shut out that first time,” she said. “The first time that this [second round] went through, of course, the web site crashed.”

For his part, Christensen said being approved for the first round of funding was a matter of timing.

“We heard about it and put in our application right away because we wanted to get our people working,” he said.

After working closely with M&T Bank on Manklin Creek Road, in short order East Coast Construction was notified funds were available.

“It took about two weeks and the money just got put into our account,” he said. “We had to sign paperwork because there’s no guarantee it’s going to be forgiven [but] they said part of it could be forgiven.”

Under the PPP guidelines, loan amounts used for payroll costs are forgivable, as well as less than 25 percent of awarded sums for mortgage interest, rent, and utility costs incurred before Feb. 15 and paid over the eight-week period after loan receipt.

Magnolia said in addition to returning staff, the funding would likely help to offset decreased profit margins.

Ocean Pines Chamber of Commerce Executive Director Kerrie Bunting

“Since we’ve gotten the PPP … people have retuned,” he said. “The PPP is going to help supplement rent (and) utilities, which is going to help with lost revenue.”

Christensen said the financial windfall has proved vital to keep operations rolling.

“It afforded the ability to keep our contracts with people and continue working,” he said. “We were able to give our customers the same service and explain to them it’s going to take us a little bit longer because we can’t put our guys on a job together [as] we’re trying to keep all our guys separate.”

Despite the array of safety mandates issued in Maryland, select industries have been permitted to maintain business practices.

“Construction workers in Maryland were allowed to keep working, but we as owners had to very cognizant of our employees and our customers,” he said.

The coronavirus has severely altered work procedures, Christensen said.

“We’re not putting people in houses,” he said. “Unless it’s an emergency, we won’t put people in homes where there’s a lot of people.”

Safety precautions have also dramatically slowed the number of projects being completed.

“It takes a lot more time and our guys have to wear masks,” he said. “We disinfect things before we go in there and we keep guys pretty much by themselves.”

Further slow-downs have been experienced while trying to source supplies.

“You’ve got to wait in line just to get in the store because they’re only letting so many people in now,” he said. “We might wait an hour [or more] to get one of our guys in to get some materials.”

Magnolia said 5 Star has run up against comparable challenges with suppliers.

“They weren’t letting us in the door, so we were having to wait in parking lots and have material brought out to us,” he said.

Christensen said without PPP funding keeping the business open would have been less feasible.

“We would have worked just to break even or lose money if we wouldn’t have had the help,” he said. “Even if they don’t forgive it all it becomes a two-year loan at 1 percent interest.”