Community lenders can start making the second round of Payroll Protection Program loans through the Small Business Administration on Monday, and advisors with the New Mexico Small Business Development Centers Network are available to help businesses if they want it.
Scott Bucher, the director of the Small Business Development Center at Eastern New Mexico University-Roswell, said that businesses can call him if they want assistance with applications or with supporting documentations. They also can contact others in the state SBDC network.
“I haven’t heard a lot from the business community yet about the loan program,” he said, but he also noted that a lot of information has been made available on the SBDC website, www.nmsbdc.org.
That includes an announcement about a Jan. 19 webinar hosted by the U.S. Chamber of Commerce about this second round of coronavirus relief funding for small businesses.
The Consolidated Appropriations Act of 2020 singed into law Dec. 27 provided an additional $284 million for PPP loans. Some businesses that received a PPP loan from the Coronavirus Aid, Relief and Economic Security (CARES) Act that went into effect in March are eligible for a second loan to cover payroll, job retention expenses and some other business expenses.
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Bucher said the need is great, that the regional economy has been “crushed” by the coronavirus and related public health restrictions on business. But he also said that many businesses are not keen on taking on more debt when they don’t know if they will be allowed to remain open or to reopen if their operations are basically shut down now by current public health orders.
“Eighty percent of jobs in New Mexico are provided by small businesses,” he said. “There’s a lot of frustration. The only carrot being dangled right now is more debt.”
In many cases, the entire loan amount can be forgiven, but businesses have to meet certain criteria for that. Bucher said that situation contains some risk for the business owner.
The Small Business Administration outlined several changes in this second round of funding.
• The covered period for the loan can be set by the business from between eight months to 24 months.
• Additional expenses are allowable, including supplier costs, property damage costs, worker protection expenses and operations expenses.
• Membership and professional nonprofit groups — those categorized as 501(c)(6) organizations by the Internal Revenue Service — are eligible for loans.
• Employers are given more flexibility regarding how they account for seasonal employees.
• Some borrowers can modify their first PPP loan.
• Some businesses can get a second PPP loan. Generally those include entities that already have used or will use the full amount of the first loan, have 300 or fewer employees, and have a 25% reduction in gross receipts from one quarter of 2019 to a comparable period in 2020.
The first round of PPP funding provided 5.2 million loans for a total of $525 billion and supporting 51 million jobs, according to the U.S. Treasury.
That total included 22,105 loans in New Mexico for $2.24 billion, according to the SBA.
While some criticized the government for allowing billion-dollar organizations and large public companies to get loans the first time, the second iteration has put more safeguards in place to ensure that small businesses will benefit. That includes that only community lenders will be allowed to make loans to first-time borrowers starting Monday and second-time borrowers starting Wednesday. After that, all eligible lenders can start loaning money under the program.
The Economic Injury Disaster grants also have been refunded for another $20 billion, with individual grants capped at $10,000. That program is expected to begin disbursing money by Jan. 17 or soon thereafter. In some cases, if people already received a grant but it was less than $10,000, they could be eligible for the difference in a second grant.
According to the U.S. Chamber of Commerce, priority will be given to small businesses with no more than 300 employees, located in low-income neighborhoods, that have experienced a 30% reduction in gross receipts during any eight-week period between March 2 and Dec. 31, 2020, compared to a comparable eight-week period before March 2.
The SBA indicated that the first $20 billion EIDL Advance grant program made 5,781,390 funding awards, including 21,625 in New Mexico for $71 million.
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at firstname.lastname@example.org.