Nearly half (44%) of US construction firms got loans quickly under the US government’s new Covid-19 Paycheck Protection Program, allowing many to keep workers on – and some even to hire more – despite a surge in project cancellations.
The data comes from a survey released Friday, 24 April by the Associated General Contractors of America (AGC).
AGC said the job-saving measure appeared to be working, but also warned it would not be enough to save an industry imperilled by plummeting demand.
It said longer term measures were needed, including new infrastructure funding, insurance, and a recovery fund.
Of 849 firms responding to the survey last week, 44% said they had received funds through the loan program, which began on 3 April.
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– Ken Simonson, AGC chief economist
Another 15% said their applications had been approved but they had not yet received funding, while 8% were waiting for a reply and 7% had applied but been told no more funds were available.
Partly as a result of the loans received, 13% of respondents said they had added workers.
Plummeting demand
The bad news is that half of respondents said clients have ordered a halt to projects underway, and more than one-fourth reported that clients had canceled projects scheduled to start in June or later.
"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," said Ken Simonson, the association’s chief economist.
Other problems are emerging, with 67% of respondents saying they had encountered project delays or disruptions, and 49% saying suppliers had notified them or their subcontractors that deliveries would be late or canceled – a percentage that has risen every week since the first survey in mid-March.
Association officials said firms need larger federal investments in infrastructure, and 35% would benefit from a pandemic risk insurance, and a Covid-19 business and employee continuity and recovery fund.
"The new federal loans are helping protect many construction jobs for now, but those funds are likely to run out well before demand for construction rebounds," said Stephen E. Sandherr, the association’s chief executive officer.
He added: "The President and Congress need to start putting in place measures to revive our economy by rebuilding our infrastructure and restoring private-sector demand for construction."
Image: Construction site in California (Scott Blake/Unsplash)Â
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