WASHINGTON – While late-stage negotiations in Washington on a new $450 billion coronavirus aid package dragged past Monday’s hoped-for deadline, New Mexico businesses were being urged to continue their application process and not wait for final approval of the deal that would replenish the Paycheck Protection Program.
Trump administration and key lawmakers on Monday insisted a final pact is within reach, and President Donald Trump said he expects a Senate vote “hopefully” on Tuesday.
As talks continued, the contours of the deal appear largely set. Most of the funding, some $300 billion, would go to boost the small-business payroll loan program that ran out of money last week, leaving thousands of New Mexico businesses and others across the country out of luck.
The package provides additional help to hospitals, and billions more would be spent to boost testing for the virus, a key step in building the confidence required to reopen state economies.
The emerging draft measure – originally designed by Republicans as a $250 billion stopgap to replenish the payroll subsidies for smaller businesses – has grown into the second-largest of the four coronavirus response bills so far.
Democratic demands have caused the measure to balloon, though they likely will be denied the money they want to help struggling state and local governments.
The Senate met for a brief pro forma session Monday afternoon that could have provided a window to act on the upcoming measure under fast-track procedures requiring unanimous consent to advance legislation, but it wasn’t ready in time.
Majority Leader Mitch McConnell, R-Ky., set up another Senate session for Tuesday in the hope that an agreement will be finished by then.
“It’s now been four days since the Paycheck Protection Program ran out of money. Republicans have been trying to secure more funding for this critical program for a week and a half now,” McConnell said. “Our Democratic colleagues are still prolonging their discussions with the administration, so the Senate regretfully will not be able to pass more funding for Americans’ paychecks today.”
The House has announced it could meet as soon as Wednesday for a vote on the pending package, according to a schedule update from Majority Leader Steny Hoyer, D-Md. The chamber is likely to have to call lawmakers back to Washington for a vote, which will present logistical challenges.
NM businesses in limbo
The government’s Paycheck Protection Program has been swamped by companies applying for loans and reached its appropriations limit last Thursday after approving nearly 1.7 million loans. That left thousands of small businesses – including many in New Mexico – in limbo as they sought help.
According to the Small Business Administration, 5,365 loans were granted to New Mexico businesses for a total of $1.1 billion through the Paycheck Protection Program compared to $3.5 billion funded in Arizona, $5.8 billion in Colorado and $21.8 billion in Texas.
When the spigot ran dry, some untold number of businesses were still stuck in the starting gate, working on the sometimes lengthy application process, but not far enough along to receive an SBA loan number – or an “e-tran number” – that their loan would come through.
“If you got an e-tran number, that means the SBA set the money aside, in theory, to pay the loan,” said Michelle Coons, regional president-New Mexico for WaFd bank (formerly Washington Federal Bank). “If you got that number, that means that your bank or credit union or whoever can prepare docs to give you the money.”
Those who have applied, but had not yet received a number are still in the pipeline and do not need to start from scratch, she said.
While Congress and the White House wrangle over deals, many lenders are encouraging businesses to keep working on their applications so they’ll be in line if and when the new deal comes through.
“They’re sitting on our desks, waiting for money to be reallocated,” said Sheila Mathews, president and CEO of Four Corners Community Bank in Farmington.
Front-loading work on the application is particularly crucial for organizations – such as some nonprofits or microbusinesses – that don’t have an existing relationship with the lender they’re applying through, Coons said. Not all lenders are accepting applications from non-clients, but lenders that are, like WaFd and, in some cases, Four Corners Community Bank, need several extra days to make compliance checks, she said.
“It’s been crazy. Crazy, crazy, crazy,” said Mathews, who added her staff was ready to start processing PPP applications at 5 a.m. local time on April 3, when the SBA’s portal first opened. “We’ve never done this many loans in this short a time – ever.”
Large chains funded
The emerging accord links the administration’s effort to replenish the small-business fund with Democrats’ demands for more money for hospitals and virus testing. It would set aside $60 billion or so for community lenders that seek to focus on underbanked neighborhoods and rural areas.
Another $60 billion would be available for a small-business loans and grants program that has previously been aimed at helping businesses harmed by such natural disasters as hurricanes. Additionally, it would bring $75 billion for hospitals and $25 billion for testing, according to those involved in the talks.
The SBA loans, based on a company’s payroll costs, offer owners forgiveness if they retain workers or rehire those who have been laid off. The law provides for forgiveness for companies in any industry – even businesses such as hedge funds and law firms. There’s a limit of $100,000 on the amount of employees’ compensation that can be considered when loan forgiveness is calculated.
Criticism of the PPP’s first round design has mounted amid news that some major chains were able to qualify for the aid, despite it being intended to help smaller businesses.
Restaurant chains Shake Shack, Ruth’s Hospitality Group and Potbelly’s each announced last week they’d obtained loans worth a combined $40 million under the program. Although the loans are within the guidelines of the PPP, Shake Shack said Monday it will return its loan to give smaller restaurants a chance to get government money. The New York burger chain, which employs nearly 8,000 workers across 189 outlets, said it secured alternate funding.
The Associated Press’ Andrew Taylor and Lisa Mascaro contributed to the story.
