Copyright © 2020 Albuquerque Journal
After 10 weeks and hundreds of billions of federal dollars, demand for a national loan program designed to incentivize businesses to retain employees during the COVID-19 pandemic seems to be waning.
However, challenges remain as businesses look to get loans issued through the Paycheck Protection Program forgiven. Some lenders and borrowers remain concerned that the program’s criteria to forgive the loans is too restrictive to help as the pandemic continues to keep businesses operating at less than full capacity.
“Small businesses are realizing that this isn’t going to last for 8 weeks, it’s going to last a lot longer,” said John Garcia, district director for New Mexico’s Small Business Administration office.
Through May 23, the SBA processed 20,431 loans to New Mexico businesses and nonprofits, totaling just under $2.2 billion under the Paycheck Protection Program.
The program provides loans to businesses that will be forgiven and converted to grants if recipients keep all employees on the payroll for eight weeks, and the money is used for payroll, rent, mortgage interest or utilities.
However, participating businesses only have until June 30 to rehire their workers. Garcia said some companies in New Mexico and elsewhere are concerned about being able to fully open and bring their employees back by that point with the pandemic still raging.
“It’s all contingent on when this disaster’s going to end,” Garcia said.
Gabriel Rios, general manager at Discount Glass and Glazing in Albuquerque, said his business received funding from its PPP loan Friday. Rios said he’s nervous about getting back to February staffing numbers by the end of June. While Rios said the glass business has been strong of late – many local employers are looking to install plexiglass sneeze guards – he said getting workers to come back may be a challenge thanks to short-term expansions to unemployment benefits.
Garcia said about $450 million in PPP funding nationally has been returned by the companies that received it, either because they found other ways to stay afloat or because they were concerned about not meeting the criteria to have the loan forgiven.
“I think a wise business owner is looking at how he’s going to adapt to the current situation,” he said.
On Thursday, the U.S. House of Representatives passed a bill that would ease restrictions on the PPP by expanding the eight-week timeline to 24 weeks, giving Rios and other business leaders more time to rehire employees.
Jerry Walker, president and CEO of the Independent Community Bankers Association of New Mexico, said he’d like to see additional help, including loosening a mandate that requires 75% of funds to be spent on payroll.
“Our small business people have gone through enough in the last 10 weeks,” Walker said.