The end of the month marks the deadline for businesses to apply for loans from the pool of money allocated late last year for the Paycheck Protection Program.
The PPP funding approved by Congress in December totaled $285 billion and was part of a $900 billion stimulus package called the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. Businesses have until March 31 to apply for a loan from a qualified lending institution.
As of the end of February, a little more than 9,000 loans had been approved for New Hampshire businesses from the December stimulus money with a total value of close to $841 million, Amy Bassett, District Director of the Small Business Administration in Concord said recently. That compares to 24,000 loans in New Hampshire for $2.5 billion from the original PPP under the CARES (Coronavirus Aid, Relief, and Economic Security) approved by Congress last March. The average size loan in New Hampshire based on those numbers was about $104,000 through the CARES Act funding and $93,000 from the second PPP funding. Those who received loans last year can apply in 2021 for a second loan or if they did not receive a loan can apply for a first loan.
“Already got it,” said Scott Rice, owner of the Woodstock Inn and Brewery in North Woodstock, when asked whether he applied for a second loan. “It was very easy. We got it within three days.”
Rice’s experience with PPP is what Congress had in mind when it passed the CARES Act to help businesses that were hard hit by COVID and forced to either close, by state order or because business declined, or curtail their operating hours and lay off employees. Restaurants and the entertainment industry were affected worse than most.
“It let us keep a lot of the employees we normally would not have been able to,” Rice said, adding that the second loan will do the same thing.
Rice also said he used all of the money for payroll and because of that, the entire amount of his first loan was forgiven.
Bassett said the rules were changed for the $285 billion to benefit small businesses and reduce the possibility of being denied a loan, which was a frequent complaint of many New Hampshire companies in the initial PPP funding.
“They definitely made it more focused and targeted,” Bassett said. “The program has changed a lot and we advise businesses to consult with their bank to figure out the best option for them. Certainly, if they have been impacted they should take advantage of the program.”
The limit on the number of employees for eligible businesses is 300 or fewer under this PPP and the loan limit is $2 million.
Among parameters of the PPP money now available is any business that received a first loan must have spent all the money, Bassett said.
In February, a change was made to the PPP that gave loan exclusivity to small businesses with 20 or fewer employees for a two-week period that ended March 9.
Though a breakdown of these loans state-by-state is not compiled by the SBA, nationally more than 400,000 small businesses and nonprofits with fewer than 20 employees were serviced as of March 7, according to the SBA. Additionally, the rate of loans for small businesses in rural areas was up 12 percent, an increase of 1,000 businesses per day, compared to average rate for the 10-days prior to the exclusivity period. Additionally, minority-owned businesses were up 20 percent and women-owned businesses 14 percent.
Mike and Christine Charest, owners of Taverne on the Square in Claremont, received $69,000 in the spring under PPP and another $89,000 from the stimulus package approved in December.
Mike Charest said the money was extremely helpful in keeping their employees on the payroll, though he added that they took money out of their own pocket as well to pay expenses.
“We did not lay anyone off and did not cut anyone’s pay,” Charest said of the restaurant’s 18 employees. “It would have been much more difficult without the (PPP) money.”
Charest also said their entire first loan was forgiven because they spent the money on payroll or eligible expenses.
Initially, under the CARES Act, 75 percent percent of a PPP loan had to be spent on payroll and the remainder on expenses such as rent, utilities and mortgage payments. Those rules were eased with the stimulus package, requiring just 60 percent on payroll and expanding eligible expenses for the remaining 40 percent to include anything incurred as a result of COVID, such as building or buying barriers in a restaurant to keep patrons safe. Also allowed are expenses to ensure worker protections during the pandemic such as air-filtration systems.
Another requirement under the current PPP funding is a business must demonstrate a revenue loss of at least 25 percent in comparable quarters for 2019 and 2020.
When the CARES Act was approved and PPP loan awarded, many businesses worried about whether they would have their loan forgiven or be forced to repay it. “They tried to streamline things this time, including forgiveness,” Bassett said. “Most of the loans are being completely forgiven.”
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