PPP round 2: 9,000 more New Hampshire businesses get assistance

Another $500 million OKd in first week of restarted program

Despite a rocky start, nearly 9,000 more New Hampshire businesses won approval for over $500 million in forgivable loans during the first week of the second round of the federal Paycheck Protection Program. More than half of the PPP’s $310 billion is already gone.

That means a total of more than 20,000 New Hampshire business have so far participated in the U.S. Small Business Administration-administered program, receiving a total of $2.8 billion in assistance. That represents 14.3% of all of the state’s businesses if you include self-employed individuals, who are increasingly applying for PPP relief.

New Hampshire’s percentage of businesses receiving assistance is a little better than the national average of 11.9%. North Dakota leads the way, at 22.3%. Maryland has the lowest rate, 9.7%.

After the first round of the program, when $349 billion was exhausted in less than two weeks, the SBA faced criticism for allowing both large banks and larger companies to grab most of the fund. When Congress approved the second round of $310 billion, some $60 billion was set aside to help small banks and nonprofit groups reach out to smaller companies or those that didn’t have a relationship with banks which grant the SBA guaranteed loans.

As a result, so far in this new round $175 billion in loans have been given out nationally to 2.2 million businesses – far more than the 1.6 million businesses that received loans in the entire first round. The average loan size has shrunk from $206,000 to just $79,000

“That’s a significant change,” said Rachael Roderick. acting director of the SBA’s New Hampshire office during a webinar sponsored by the Business and Industry Association of New Hampshire. “The loan size has gone down dramatically. This is really good news.”

In New Hampshire, the average loan size has fallen from $173,000 in the first round to $64,000 so far in the second.

All this means that a lot more businesses are getting though this time, despite repeated computer crashes during the first few days of the PPP’s second round.

“There has been a significant reduction in applications,” said Bar Harbor Bank & Trust’s executive vice president and chief lending officer, John Mercier, in the same BIA webinar. “That indicates that most people who wanted had already got the loan.”

He suggested that “now is a good time to have that conversation” if a business is looking for a loan. “Right now we are turning around a loan in a matter of days where before it was about a week.”

Loan forgiveness details

Still, with all those loans in the pipeline, it is not clear how long the remaining $135 billion will last.

An SBA companion program, Economic Injury Disaster Loans (EIDL), which includes grants up to of up to $20,000, finally opened up Monday, a week after it received another $60 billion in funding. But it is only limited to agricultural businesses, which weren’t included in the first round, and those whose first-round application was stalled due to changes in the program and the computer system.

To apply to the EIDL program, which also offers 30-year 3.75% loans, a business must go directly to the SBA. At the end of the EIDL’s first round of funding, only about 125 New Hampshire businesses accessed the loan part of the program.

Now that many businesses have received their money, the focus shifts to how the forgiveness part of the PPP loan works.

Businesses don’t have to pay back the loan as long as they spend at least 75% of the proceeds on eight weeks of payroll and as long as it is goes to the same number of employees at the same hours and same rate of pay. The rest can be spent on rent and utilities.

On Monday, the SBA said it won’t penalize companies for failing to meet the full-time-equivalent requirements if former employees refuse to come back to work when they are offered a job, but they still have to pay 75% of the loan proceeds on payroll.

But some of the details have to be ironed out. Utilities can include internet costs, but it’s unclear whether cell phone bills can. It might include gas, but not waste removal.

Companies that don’t spend all their loan money during the eight weeks of the loan date currently must pay it back at a 1% interest rate two years from the day they get the loan, though they don’t have to make any payments for six months. Companies have asked for more flexibility as to when to spend the money, but that requirement still remains.

Businesses that have received loans over $2 million (the upper limit is $20 million) will be directly scrutinized by the SBA, given the criticism the agency faced when large public companies disclosed that they took part in the program. (The SBA has yet to release any names of loan recipients, as the agency routinely does with its other loan programs.). Banks that made the loan will be handling forgiveness for smaller loans and then be reimbursed by the agency.