Distribution rules unveiled for New Hampshire’s Main Street Relief Fund

More help could be on the way for small and mid-sized New Hampshire businesses hurt by the coronavirus pandemic, but they have to act this week to take advantage of it, and not all businesses are eligible.

Some 13,000 Granite State businesses submitted pre-applications to the $400 million Main Street Relief Fund by the May 29 deadline and they have until Friday, June 12, to submit a final application.

In addition, the federal government has greatly increased the flexibility of the forgiveness guidelines under the Payroll Protection Program. That $659 billion program has stalled the last three weeks – perhaps because of the former forgiveness provisions – so there is still $150 billion left in it. But it’s not clear how long those funds will last now that the restrictions have been eased.

Final rules for the state’s Main Street Relief Fund, were released Friday, five days later than originally scheduled.   The program is not to be confused with the federal he Main Street Lending Program, which is for firms with more than 500 employees, as opposed to the PPP, which is for firms under that threshold.

The state’s Street Relief Fund is also for smaller businesses – those with less than $20 million in gross receipts, and it excludes franchises and national chains. But not all small businesses are eligible.

That’s because the rules make it clear that self-employed individuals can’t receive assistance. The business has to be based in New Hampshire, has to have been in operation since May 29, 2019, and not be in bankruptcy or permanently closed. The fund also excludes nonprofits, childcare providers, healthcare providers, schools, colleges and farmers, all which will be aided separately.

The new rules also impose a loan cap of $350,000.

Determining size of grant

Here is how it works:

A business has to subtract its anticipated gross receipts for 2020 from its actual gross receipts for 2019. Then it subtracts half of what it received got from the PPP program as well as any other federal assistance, including the U.S. Small Business Administration’s Emergency Injury Disaster Loan program. That is called the business’ “total qualified loss.” The state then adds up all eligible businesses’ qualified losses to figure out how the money will be distributed.

For instance, suppose all of the businesses that apply expect to lose $800 million because of the pandemic, even taking into account federal aid. Then a business would only receive half of it s qualified loss because only $400 million is in the program. So a business that expects to lose $10,000 will receive $5,000. Another losing $100,000 will receive $50,000 and a business losing $1 million will receive $350,000 because of the cap.

The state won’t know the distribution percentage until all applications are received. Once it does, the state will distribute the funds, though it did not say when that will happen.

Unlike the PPP program there are no restrictions on what businesses can use the money for. They could use it on wages, loan obligations or just pocket it as profits. The state, unlike the federal government so far, does plan to release a list of which businesses received money, where they are located and how much they got.

But it doesn’t end there. The PPP provides loans that can be forgiven. The Main Street Relief Fund offers grants that can become loans.

That’s because at the end of the year, the business has to tell the state Department of Revenue Administration what its actual gross receipts were. If the losses were less than anticipated, there will be “additional instructions regarding your potential obligation to return excess funds,” according to the frequently asked questions page on the program’s website. “If the actual business loss is not at least as much as was represented on the Final Grant Submission, the award may be subject to recoupment in whole or in part,” it says.

PPP changes

Also on Friday, President Trump signed into law the PPP Flexibility Act, which addresses the question: What does a company have to do to get its loan forgiven?

Under the original law, businesses had to spend 75% of their loan on payroll and the rest on rent and mortgages, and they had to spend it all in eight weeks. Otherwise, they would have to pay that money back at 1% interest in two years.

But many businesses complained that although they needed the money as soon as possible, they wouldn’t be able to fully reopen in eight weeks.

Under the new bill, businesses have up to 24 weeks to pay that back, and they only have to spend 60% on payroll.   They also have until the end of the year, not midyear, to restore the same number of workers, at the same pay and same hours, they had before the pandemic.

The loan might still be forgiven if they can show they could not rehire new staff, and they can pay back whatever isn’t forgiven over five years, rather than two years – at the same 1% interest rate – if they get an extension.

“We are really excited by the extension,” said Jessyca Keeler, executive director of Ski NH, told U.S. Sen. Jeanne Shaheen, a strong supporter of the PPP revision, during a teleconference with local businesses on Friday morning, after the Senate passed the bill. “We don’t have many employees during the summer. It is great to have those fixes,” said Keeler.

As of May 30, the PPP has given out $510 billion to 4.5 million businesses nationally and $2.5 billion to 22,500 New Hampshire businesses.