Copyright © 2020 Albuquerque Journal
After 10 weeks and hundreds of billions of federal dollars, demand for a national loan program designed to encourage businesses to retain employees during the COVID-19 pandemic appears to be waning.
However, challenges remain as companies seek cancellation of loans issued under the Paycheck Protection Program. Some lenders and borrowers remain concerned that the program’s criteria for canceling loans are too restrictive to help as the pandemic continues to keep businesses below full capacity.
“Small businesses are realizing that it’s not going to last 8 weeks, it’s going to last a lot longer,” said John Garcia, district manager of the New Mexico Office of Small Business Administration.
As of May 23, the SBA has processed 20,431 loans to New Mexico businesses and nonprofits, totaling just under $ 2.2 billion under the program. paycheck protection.
The program provides business loans that will be canceled 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 services. public.
However, participating companies only have until June 30 to rehire their workers. Garcia said some businesses in New Mexico and elsewhere fear they may be able to fully open and bring their employees back at this point, with the pandemic still raging.
“It all depends on the end of this disaster,” Garcia said.
Gabriel Rios, managing director of Discount Glass and Glazing in Albuquerque, said Friday his company received funding from its PPP loan. Rios said he was nervous about returning to February strength by the end of June. While Rios said the glass business has been strong lately – many local employers are looking to install Plexiglas sneeze guards – he said returning workers could be a challenge due to the short extension. term of unemployment benefits.
Garcia said about $ 450 million in nationwide PPP funding has been returned by the companies that received it, either because they found other ways to stay afloat or because they were concerned that they would not meet the criteria for canceling the loan.
“I think a wise business owner is looking at how he is going to adapt to the current situation,” he said.
The U.S. House of Representatives on Thursday passed a bill that eases restrictions on PPP by extending the timeframe from eight weeks 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 would like to see more help, including a relaxation of a mandate that requires 75% of funds to be spent on payroll.
“Our small business owners have been through quite a bit in the past 10 weeks,” Walker said.