Businesses brace for a summer with few out-of-state tourists

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ORONO, Maine — Joe and Al Minutolo have been through a few economic disasters since opening The Bar Harbor Bicycle Shop on Mount Desert Island in 1978. The two brothers have kept their doors open through the 1979 oil crisis, the savings and loan catastrophe in the late 1980s, and later, the 2008 recession. 

Now, they’re up against the global coronavirus pandemic. 

With tentative promises of a slow re-opening to Maine’s economy, businesses like the Minutolos’ — which partly relies on summer tourism — must find creative ways to keep things running, despite mounting uncertainty of what’s to come. 

“It’s a moving target — that’s the problem,” said Joe Minutolo. “It’s going to be a survival year, not a banner year.” 

[Our COVID-19 tracker contains the most recent information on Maine cases by county]

About an hour north, Jon Tierney is bracing his own business for a difficult summer season, as hope for a return of out-of-state tourists dwindles. Tierney owns Alpenglow Adventure Sports — which has stores in Bar Harbor and Orono — along with the Acadia Mountain Guides Climbing School. 

As businesses across the state are forced to lay off employees, it has left owners to figure out how to stretch their federal loan dollars and function with just a fraction of their staff. 

A couple walks by Alpenglow Adventure Sports in Orono on Friday evening. (Nina Mahaleris | The Penobscot Times)

For Tierney, the real trouble comes in the summer, when he’d normally be scheduling 10-12 employees to lead guided tours of Acadia National Park or Baxter State Park. But as tourists rethink their travel plans, and cancel their reservations, it means staff have fewer tours to lead — and fewer hours for which they are paid.

Last month, roughly one in 10 small Maine businesses received a portion of more than $2.2 billion in federal funds, and Tierney was one of them. But tight deadlines and ambiguous expectations about how to use the money so it may be forgiven as a grant rather than considered a loan to repay has put owners — Tierney included — in a tough position. 

While funds from the Payroll Protection Program will allow Tierney to continue to pay his five working employees, it introduced new complications about how to spend the $80,000 loan by June 5 — an eight-week window. The loan was based on Tierney’s 2019 payroll year.

Spending all of that money with only a fraction of his staff actually putting in hours is a  challenge that Tierney isn’t sure how to navigate.

Along with guided tours, the business also offers weekly summer camps. Approximately 110-120 people register each season. But so far, only 28 have signed up —  people mostly from out of state who may not end up going at all, if the pandemic persists, Tierney said. 

Does he hire his full staff back, unable to predict whether enough tourists will come to Maine and sign up for their guided hikes and summer camps? Does he reinterpret the rules of the loan and pay employees even if they’re not working? Or, return the loan and do none of it? 

The PPP loan gives businesses some flexibility, allowing them to use a certain percentage of the money to pay mortgage interest, rent and utility costs, but for Tierney, these expenses would be small, using just $5,000-$6,000 of the loan, he estimated. 

“To put that all to payroll is very hard when you’re operating at 20 percent capacity,” said Tierney. “It’s really hard to kind of know what to do.”

He isn’t alone in this conundrum. Small businesses across Maine have found themselves trying to figure out how to best use their federal loans, and waiting for a response from lenders, with little to no idea whether they’ll get a loan at all. 

[Maine small businesses with federal loans face hard decisions on what to do next]

Several weeks after applying for a loan from the Small Business Administration, Tierney still hadn’t heard back. 

To bridge the gap, Orono’s Town Council is considering establishing a new micro-loan guarantee program of up to $10,000, to help local businesses waiting for federal funding. 

Minutolo also secured a loan from the PPP, but acknowledged the troubles that came along with it. “The communication of getting these loans, what would be forgivable, [what wouldn’t be] … wasn’t as clear as it could’ve been coming from the top,” he said. 

As Memorial Day approaches — which would normally be a kick-off weekend for the bike shop — the Minutolos are preparing for another wave of financial challenges while the threat of an empty Mount Desert Island looms in the distance. 

For Bar Harbor, a town with an estimated population of 5,000 people, seasonal and year-round businesses will be hindered by a lack of summer tourists, Minutolo explained. Without foot traffic, he said he wouldn’t be surprised if the bike shop lost up to half of its normal sales volume this summer, too. 

While pandemic restrictions have limited their normal operations, both Alpenglow and the Bar Harbor Bicycle Shop are altering their own methods to save their businesses. In Orono, Tierney and his five regular employees stay busy by processing and shipping out online orders.  

On the island, Minutolo’s staff fixes and sells bikes from a distance, without letting a single shopper step foot in the store. It’s these adjustments that will keep small businesses alive during hard times, Minutolo explained, like they have for more than 40 years. 

“We always bounce back,” he said.