NEW MEXICO (KRQE) – New Mexico’s businesses, across all industries, were approved for more than $3 billion in Paycheck Protection Program funding, data from the US Small Business Administration (SBA) shows. With an average loan value of $81,277, New Mexico is in the top twenty states, but far below the national average of nearly $130,000 per loan.
New Mexico’s average loan value was higher than the average Paycheck Protection Program (PPP) loan in California, Colorado, or Arizona. Texas’s average loan value was just above New Mexico’s average. Wisconsin had the highest average loan value, thanks in part to a hefty $10 million loan to Air Wisconsin Airlines that was intended to support 500 jobs.
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At a little over $81,000, the average PPP loan in New Mexico was higher than some neighboring states. Texas and Utah, however, had higher average loan values. Data from SBA.
Companies in the oil and gas support services industry were approved for more PPP funding than any other individual industry in New Mexico (as classified by the North American Industry Classification System). The industry was approved for over $223 million via 842 loans. That’s $196.8 million more than elementary and secondary schools were approved for and $206.8 million more than nursing care facilities in the state saw.
Oil and gas support services generally include contract-type services necessary to keep oil and gas operations running. They include activities such as site exploration, excavation, and well cleaning.
These services received a lot of funding because oil and gas represent a relatively large industry in the state, explains John Garcia, the district director for the New Mexico office of the SBA. His office, and similar offices across the US, backed PPP loans, essentially acting as guarantor for the cash intended to keep workers on payroll.
“We didn’t have the manufacturing industry that other states have,” Garcia says. “We don’t have the big corporate companies in our state that other states have, that pulled in a lot of those [large sums of] moneys.”
What we do have is oil and natural gas. Together, they contribute several billion dollars to the state each year, according to the Legislative Finance Committee. PPP loan approvals to oil and gas-related businesses in New Mexico were intended to support more than 17,600 jobs, according to the SBA data.
In 2020, New Mexico was the third-largest oil producer among US states, according to the US Energy Information Administration (EIA). And the pandemic brought the closure of oil and gas rigs here in New Mexico due to a lack of demand. In fact, in 2019 the average number of rigs (of all types) operating in New Mexico was 106 per week, according to data from Baker Hughes. The average number of rigs operating in 2020 was only 69 per week, a 34% decline.
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Interactive Map: New Mexico was one of three states where oil and gas support operations were approved for the largest share of PPP loans. Data from SBA.
New Mexico, Wyoming, and North Dakota were the only three states where oil and gas support businesses were approved for more PPP funding than any other individual industry. Although Texas produces more oil than New Mexico, and saw a greater shutdown of rigs than New Mexico, the lone star state received more money for full-service restaurants than for oil and gas support operations, according to data from the SBA and EIA.
In New Mexico, the majority of oil and gas support PPP loans went to borrowers in Hobbs, Carlsbad, and Artesia. In Hobbs, more than 250 loans were approved for oil and gas support companies.
Oil and gas are “embedded in our community. It’s respected in our community. They are great community supporters,” explains Rep. Jim Townsend, who represents Chaves, Eddy and Otero county. “You can go to almost any little league ballpark and you can see the evidence of oil and gas supporting that.” When the pandemic hit these oil-dependent communities, they felt the economic burden, he says.
Harry Teague, a former congressman and current owner of Cavaloz Energy Inc. in Hobbs, New Mexico, recalls the experience: “I didn’t know if we would have the same neighbors tomorrow when we’d come to work, didn’t know if we would have jobs to come to.” The pandemic was “something that [we] had never seen the likes of before.”
Cavaloz Energy, which falls under the oil and gas support industry, was approved for more than $1.5 million via PPP and PPS (the first and second round of loans), according to data from the SBA. The money helped support 37 jobs within the company, according to the data.
When asked if the funding was sufficient, Teague said there’s always a need for more: “Just like asking your daddy for money to go to the movies, it’s never enough.” Still, “any time that you get any help making payroll, it definitely helps,” Teague says.
Food service funding
Taken as an individual industry, full-service restaurants in New Mexico were approved for the second largest total sum of funds, according to the SBA data. Although full-service restaurants were approved for $3.2 million less than the oil support industry, they still saw nearly 220 million in PPP funds in New Mexico.
When PPP loans to both full and limited-service restaurants — which include carry-out restaurants, cafes, and pizza delivery — are combined, they surpass oil and gas funding in New Mexico. And PPP loans to both full and limited-service restaurants in New Mexico were intended to support more than 52,000 jobs, according to the SBA data.
PPP loans to restaurants averaged a little under $5,400 per employee, while PPP loans to oil and gas industries averaged more than $15,000 per employee, the data shows. This difference is likely due to the difference in average salary for each industry.
Most PPP loans values, roughly speaking, were based on multiplying payroll by a multiplier. So, better-paid industries were likely to get more cash per worker. In New Mexico, the average salary in the oil and gas industry is more than $71,000 per year, according to the New Mexico Oil and Gas Association. The average salary for restaurant workers, on the other hand, is around $24,000 per year, according to data from ZipRecruiter.
Still, full and limited-service restaurants were approved for nearly $59 million more than oil and gas support services. Albuquerque had the most PPP loans to full and limited-service restaurants, with 792 approved loans. Santa Fe was second, with 316 loans. In total, Albuquerque-based restaurants were approved for over $106 million.
The recipients ranged from sole proprietorships approved for around $1,000, to well-known restaurants like Dion’s Pizza, which was approved for over $4.5 million, and Weck’s parent company, which was approved for more than $3.6 million. The SBA data shows Weck’s has already repaid more than $1.6 million of that.
On top of the PPP loans, some restaurants also had a chance to get “Restaurant Revitalization” funding. In New Mexico, 601 businesses have received a total of over $169 million in revitalization grants, according to the SBA.
Across the nation and here in New Mexico, it’s likely that PPP funds did help businesses survive the pandemic. While not every business was able to stay afloat — Stein Mart, for instance, closed all of its stores despite a $10 million PPP loan — a working paper from the National Bureau of Economic Research found that PPP loans boosted employment and increased business survival rates. The research, however, is still preliminary and has not been peer-reviewed.
Now that the pandemic is easing, John Garcia from the New Mexico SBA says he’s “just glad to see small businesses surviving.” After all, “they employ about 330,000 [to] 350,000 Mexicans. They represent about ninety five percent of the employment for the state,” Garcia says. And “without small businesses, where would we be?”
Throughout the state, a little over 31% of loans to restaurants have been marked as fully paid as of July 1, 2021. Just under 30% of the loans disbursed to oil and gas companies have been paid in full.