State officials and business leaders are urging small business owners to consider applying for the U.S. Small Business Administration Paycheck Protection Program, given recent changes that provide more flexibility and forgiveness.
With the PPP deadline for loan funding on June 30, there are just a few days left for businesses still interested to receive funding from private lenders who are partnering with the U.S. Small Business Administration (SBA), according to a Friday announcement from the New Mexico Economic Development Department. There is $129 billion left for PPP lending nationwide.
The new PPP Flexibility Act, signed into law June 5, means more businesses in New Mexico who apply for forgiveness of loan amounts should be able to receive it. As a result, more of the money going to New Mexico businesses will stay in the state and not have to be repaid, the EDD release stated.
“The new guidelines mean that New Mexico businesses can reopen at their own pace and work toward a safer, stronger recovery,” Cabinet Secretary Alicia Keyes said. “The businesses can take more time to prepare and have until the end of the year to hire back employees. The changes are a good thing for many small businesses in the state that are still under some health restrictions. I urge businesses who have not yet applied for PPP to take another look at this program before it closes for good on June 30.”
The biggest change allows PPP loan recipients until Dec. 31, 2020 to restore the employee headcounts to pre-pandemic levels. The provision does not require hiring back a specific worker, just reaching the same pre-pandemic headcounts to qualify for some loan forgiveness.
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The new rules also reduce the percentage of PPP dollars required to be spent on payroll from 75% to 60%. That change is particularly beneficial to businesses with few employees but higher overhead in other areas such as rent, utilities and mortgage interest.
The term for new loans is also extended from two to five years for any repayment amounts that would be due back to the lender, and the time period to use PPP money has been extended from eight to 24 weeks.
In addition, U.S. Sens. Martin Heinrich and Tom Udall announced Friday that the SBA has agreed to simplify the PPP loan application form.
“Small businesses are breathing a sigh of relief that they now have more time to bring back employees,” said John Garcia, New Mexico SBA district director.
“The changes are really important for hospitality businesses, gyms and restaurants — many of the businesses that are still under COVID-19 restrictions,” added Russell Wyrick, executive state director of the Small Business Development Center (SBDC) Network.
The SBA also reopened its application portal for the Economic Injury Disaster Loan Program (EIDL), which provides low-interest loans of up to $2 million, with payback periods of 20 to 30 years.
Some 650 New Mexico banks, credit unions and community lenders have been active in SBA lending over the past several months, with $2.2 billion in PPP money going to 20,431 New Mexico businesses and nonprofits. Nationwide, $511 billion has been distributed under PPP.
For information on PPP and all the SBA loan programs, go to www.sba.gov.
For information on state assistance, including the COVID-19 Loan Guarantee Program and the no-interest LEDA loan program, go to the EDD website, www.gonm.biz.
For technical help and advice on SBA programs and loan applications, go to www.nmsbdc.org.