A large share of construction firms promptly received loan funds under the new Paycheck Protection Program, enabling many of them to hire or retain employees despite a surge in project cancellations, according to a survey recently released by the Associated General Contractors of America (AGC). Association officials said the job-saving measure appeared to be working but cautioned that longer term recovery measures, like 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, the association’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.” Click here for additional video comments from Mr. Simonson.

Simonson noted that 44% of the 849 firms responding to the survey reported they had already received funds through the loan program, which began on April 3. Another 15% said their applications had been approved, but they had not yet received funding, while 8% were awaiting a reply to their applications and 7% had applied but been told no more funds were available. Partly as a result of the loans, 13% reported adding 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,” said Simonson, noting that half of the respondents reported that clients have ordered a halt to projects underway, and more than one-fourth report that clients have canceled projects that had been expected to begin as far out as June or later.

In addition, 67% of respondents in the latest survey, which was conducted April 20 to 23, said they had encountered project delays or disruptions. Moreover, 49% said suppliers had notified them or their subcontractors that deliveries would be late or canceled. That percentage has risen each week since the association’s first survey, conducted March 17 to 19, in which 22% of respondents reported delivery woes.

Association officials added that 43% of firms would benefit from larger federal investments in infrastructure, while 35% would benefit from a pandemic risk insurance/COVID-19 business and employee continuity and recovery fund. They called on federal officials to begin work on new infrastructure investments, explore ways to establish pandemic insurance, and a recovery fund to help offset expected declines in construction demand because of the coronavirus.

“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. “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.”

For more information, read the survey results.