SANTA FE, N.M. (AP) – Only about $20 million of a $400 million loan program for New Mexico small businesses hit by the pandemic has been approved to send out since the program began in August, according to the state agency running the program.
“We created the program, believing that about 5,000 applications would be processed. And it’s a much smaller volume than that,” said New Mexico Finance Authority CEO Marquita Russel at a presentation to state legislators Tuesday.
Low participation has saved the agency money on contractors, Russel said.
But it’s also a sign that the legislation isn’t reaching many small businesses. Fewer than 900 businesses have applied for loans under the program, which range from $500 to $75,000.
That’s despite ongoing pain in the New Mexico economy where the 11.3% August unemployment rate was far higher than the national average of 8.4%, and businesses face occupancy limits ranging from 75% for hotels to 25% for restaurants.
Hundreds of applications have been rejected.
Around 85% of those businesses that didn’t qualify for the Small Business Recovery Loan Fund failed to meet the requirement of showing a loss of at least 30% of revenue in April and May compared with the same period in 2019.
That included for-profit companies that already had “business in the hopper,” Russel said, even if they’re going broke now.
It also includes nonprofits that raise the bulk of their money during other times of the year, and there’s no flexibility in the program for businesses that are less than a year old and therefore can’t compare revenues.
The fund gives two months’ worth of operating expenses to eligible entities owned by residents at an interest rate of around 2%, with no payments required in the first year.
Investment and Pension Oversight Committee Chairman Sen. George Muñoz asked for suggestions in the coming weeks on how to tweak the program to increase the distribution of the loans.
“Because who knows what the economy is going to be like — if we’re going to see another surge in November,” said Muñoz, a Democrat representing Gallup.
Russel suggested creating more flexibility for the requirements. She added that 8% of applications were rejected for not meeting resident ownership requirements, particularly counties bordering Texas, Colorado and Arizona.
The loan program is set to end in December, even if the funds haven’t been used.
On Tuesday, state officials reported 316 new COVID-19 cases bringing the total number of cases this year to 30,947. Among the newly confirmed infections are a dozen teachers and two students from the public school system across six counties.
No new deaths were reported, leaving the death toll at 894.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. Around 17,500 diagnosed with the COVID-19 in New Mexico have recovered, according to state officials.
For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.
Attanasio is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on under-covered issues. Follow Attanasio on Twitter.