New Mexico and the Paycheck Protection Program: How have we done?
After three months, $2.2 billion and countless sleepless nights for lenders, the original deadline for companies to apply for federal funding through the Paycheck Protection Program has come and gone.
While that deadline to apply now has been extended until August, New Mexico program experts confirmed that the number of new applications has slowed to a crawl.
“For the most part, we’re kind of in a holding pattern,” said Sheila Mathews, president and CEO of Four Corners Community Bank in Farmington.
So with that in mind, how have New Mexico organizations stacked up against their peers in other states when it comes to net dollars received? Better than might be expected considering the circumstances, but with plenty of room for improvement.
“I think, per capita, we did well,” said John Garcia, New Mexico District Director for the SBA. “I think all of us across the country could do better.”
The PPP, which launched in April under the federal CARES Act and was subsequently renewed and modified in May, provides grants to struggling businesses and nonprofits that can be converted to loans if the organization maintains its payroll and meets certain other criteria.
From the beginning of April, when the program launched, through the end of June, lenders issued 21,924 loans to New Mexico organizations, ranging from hotels to art collectives to private schools, according to a report from the SBA. Those loans totaled just over $2.24 billion.
That aggregate total lags behind New Mexico’s neighbors, including Colorado ($10.36 billion) and Arizona ($8.62 billion). Because of New Mexico’s much smaller population, the discrepancy makes sense. However, the Land of Enchantment lags behind its neighbors in certain per capita measures as well, including the percentage of small business payroll in the state that has been covered by PPP loans.
According to the report, the SBA estimated that 77% of the small business payroll in New Mexico has been covered by PPP loans. That’s the secondlowest figure among states west of the Mississippi, behind only Washington and tied with California and Oregon.
Jerry Walker, president and CEO of the Independent Community Bankers Association of New Mexico, said New Mexico’s comparatively rural nature works against it, as businesses in the state are left to compete with larger businesses that have ties to massive banks.
“We don’t have quite as many small businesses who had established banking relationships,” Walker said.
After the first round of funding became a scrum for funding that was dominated by
the biggest lenders, the balance of power shifted more toward smaller lenders.
When Congress approved an additional $310 billion in funding in April, the rules were amended to allocate $60 billion to smaller lenders, which Garcia said helped New Mexico businesses. According to the report, more money was dispersed nationwide by lenders with less than $10 billion in assets than lenders with more than $50 billion through the end of June.
Garcia praised New Mexico’s community banks for staying with the program through technical glitches and other frustrations.
“The small rural banks were the real champions of this,” Garcia said.
Under the new rules, businesses now have until Aug. 8 to apply for the roughly $130 billion that’s still available through the program.
“We’ve been building the airplane as we’re flying it, and now we’re building the landing gear,” Garcia said.
Michelle Coons, regional president for WaFd Bank in New Mexico, said her branch has opted not to continue accepting new applications, choosing instead to focus on the forgiveness portion of the program.
Coons said one issue that has come up for organizations seeking to get their loans forgiven is the presence of an SBA Economic Injury Disaster Loan. Coons said some companies applied for an EIDL loan advance, designed to give companies a small infusion of capital in times of crisis, without knowing if they’d receive it, and didn’t disclose it during the PPP process.
Consequently, she said those organizations may have to deduct the total from the EIDL program from their PPP forgiveness.
“I think that’s going to be quite a surprise to many clients,” Coons said.