BETTER LUCK THIS TIME
Federal small-business loan smooths glitches in new funding round
Like many other restaurant owners in Albuquerque and across the country who have seen their bottom line hurt by the COVID-19 pandemic, Golden Crown Panaderia owner Pratt Morales looked to the U.S. Small Business Administration’s Paycheck Protection Program for some relief.
Unlike many other applicants, however, Morales received the federally backed loan of $76,000 earlier this week, just a week after applying. Morales said he thinks the quick response is due in part to his decision to wait for the second round of funding to apply.
“I thought I’d wait until things settled down a little bit,” he said. “And I’m glad I did.”
While new data is still coming in, banks, businesses and lending experts have reported that the second lending cycle for the federal program has so far been far smoother than the first, which was plagued by technical challenges and miscommunication.
“I think we were able to get the bugs out of the system,” said John Garciadistrict director for New Mexico’s Small Business Administration office.
The program, which provides forgivable loans for businesses that keep all of their employees on the payroll for eight weeks during the pandemic, was introduced in March. Funds were quickly depleted.
The second round of funding opened April 27 with $310 billion available. As of Wednesday evening, around 2.44 million loans totaling $183.5 billion have been approved in the second round of the program.
In New Mexico, 10,001 loans totaling $758.8 million were approved from April 27 to May 1, the first week of the program’s second round, according to a report from the SBA. That funding total ranks 36th among U.S. states and territories.
Garcia said opening a second portal helped, as did allowing small community lenders greater access to the program.
Of the $310 billion, Garcia said $60 billion was earmarked for community lenders, which gave those institutions a chance to secure funding without competing with larger banks.
In the second round of funding, 946,111 applications were processed by lenders with assets totaling $10 billion or less — significantly more than the number processed by lenders between $10 and $50 billion in assets. Garcia said that has led to more small businesses opening new accounts with community banks.
Anne Haines, president and CEO of Albuquerque-based community lender DreamSpring, said the first day of the new period was a bit slow, but things sped up after that. As of the start of May, DreamSpring had processed $17.2 million in forgivable loans for 470 New Mexico companies, including Golden Crown.
“It’s gotten much better over the last couple days,” Haines said.
Large banks were still able to get in on the action. Bank of America processed 914 loans in New Mexico totaling more than $61 million, according to bank spokeswoman Colleen Haggerty.
Garcia said around $116 billion is still available. However, he urged companies to take stock of when and how they’re going to be able to open before seeking more aid.
“If we continue in a lockdown mode, their employees aren’t coming back into to work yet,” he said.