EDITOR’S NOTE: This article was updated to correct the amount Congress initially set aside for the Paycheck Protection Program.
Small businesses that weren’t able to apply for a forgivable federal loan program earlier this month may be about to get a second chance.
But those who haven’t already applied for a loan through the Paycheck Protection Program may have to move fast, and some experts believe it may be too late already.
“It’s going to be a race, and it’s going to be a fast one this time,” said John Garcia, director of the U.S. Small Business Administration’s New Mexico district office.
Congress has moved swiftly this week on a measure that includes an extra $310 billion for the PPP, after the first $349 billion – approved in March – ran out less than two weeks after it began accepting applications.
The House passed a roughly $480 billion bill, which also includes money for hospitals and to expand COVID-19 testing, on a 388-5 vote Thursday. The bill already passed the Senate and now is headed to President Trump, who has indicated support for it.
However, Garcia said many banks have a lot of unprocessed applications sitting on their desks, which will take first priority once new funding is approved.
Wryan Capps, a partner at Axiom CPAs in Albuquerque, said it’s possible there won’t be any money left over for new applicants once the backlog is exhausted.
“Those pending applications should eat up the funds first,” he said.
In New Mexico, Garcia said 8,277 program applications from small businesses totaling $1.5 billion were processed from April 3 to April 16, when the money ran out.
During that period, many businesses that tried to apply were unable to find a lender willing to work with them. Many others that had an application approved are still waiting for funds.
One issue was poor communication between lenders and businesses. Capps said Axiom submitted an application early in the program for a loan to help keep its approximately 20 employees on payroll. He didn’t learn from his lender, Bank of America, that his company’s loan wasn’t approved until the funding was gone.
Justin Taibbi, owner of Atlas Electrical Construction, was also frustrated by a lack of communication.
“We feel like we lost about a week in just trying to understand which lender we could submit the application to,” said Taibbi, who applied through Wells Fargo and is waiting for his application to be approved.
Garcia said the SBA has worked to correct these and other issues that plagued the program during the first round of funding. He said the organization has worked with banks to streamline the documentation process. The online portal SBA used to process loans, which crashed multiple times during the first round, has been upgraded to better handle what he said was likely to be “a tsunami” of new applications. The proposed funding includes a $60 billion pot of money earmarked for smaller, regional lenders, a group not specifically identified in the first round. DreamSpring, a New Mexico microlender, is urging New Mexico businesses to apply immediately through its website.
Even with the new adjustments, Michelle Coons, New Mexico regional president for Washington Federal Bank, said it’s unclear whether businesses that didn’t apply during the first round will stand a chance at getting funding now. Coons said her own bank has more than 1,000 businesses in line to receive funding.
“It will be very interesting if that money lasts more than a day,” she said.
Russell Wyrick, state director of New Mexico’s Small Business Development Center network, said businesses should apply as soon as possible.
“There is a high likelihood that they’ll get left behind, if they’re not ready when the opportunity comes,” Wyrick said.
