Lessons learned from the federal Paycheck Protection Program in 2020 have led New Mexico financial institutions to try to get more of these forgivable loans to low-income, underserved business owners and simplify the application process.

The PPP, touted as small business pandemic relief, came under criticism in the spring after major corporate entities received the loans.

The third round of businesses applying for $284 billion in loans entered its fifth day Friday.

The Small Business Administration opened this round Monday, allowing only first-time PPP applicants to apply Monday and Tuesday. Second-time applicants could apply beginning Wednesday. Only community development financial institutions, minority depository institutions, certified development companies and microloan intermediaries could accept applications before Friday.

“One of the things we were grateful for with this early access is it is less taxing for the IT infrastructure [to get applications processed online],” said Marisa Barrera, executive vice president at DreamSpring, which issues loans to small businesses in underserved neighborhoods throughout the state that aren’t able to get bank loans. “There were a lot of glitches [in 2020].”

The first $369 billion in PPP funding started April 3, and the program ran out of money April 16, far short of the June 30 deadline. Another $310 billion in assistance started April 27, but money was left over in July.

“What we don’t know is how quickly the money will be spoken for this time,” Barrera said.

The PPP is a federal incentive for small businesses, generally fewer than 500 workers, to keep employees on the payroll even if businesses are closed or have drastically reduced sales. The loans are forgivable and essentially become grants if employee retention criteria are met and funds are used for eligible expenses.

PPP loans can fund payroll costs, rent, mortgage interest, utilities and certain operational and supply costs, according to SBA guidelines.

DreamSpring is accepting PPP applications from any small business, but Barrera said the organization wants 60 percent or more of its applicants to come from minority and underserved businesses.

DreamSpring by Thursday had accepted 430 PPP applications from New Mexico small businesses requesting more than $17 million. Barrera acknowledged many minority and non-English-speaking business owners were left out in 2020.

“One of the things we learned is how important community outreach and marketing to the underserved community is,” Barrera said. “We really think it is vital for the underserved entrepreneur to be familiar with and encouraged to apply [for a PPP loan].”

For this round, DreamSpring is assisting applicants in English and Spanish.

In April, Santa Fe-based Century Bank accepted applications from 552 New Mexico businesses asking for $102 million.

“Our goal is to handle as many applications as possible,” Century Bank regional President Gary Lutz said.

The lesson Century Bank learned in 2020 was the paper application process was too cumbersome.

“We contracted with a technology firm that does automated online processing of applications,” Lutz said. “The first time we were doing paper applications, manually inputting data. We want to process applications sooner so [a] business can get funding sooner.”

The standard loan amount a business can ask for is 2.5 times more than the average monthly payroll costs from 2019 and 2020, up to $2 million. However, hotels and restaurants seeking a second PPP loan can apply for 3.5 times more than their average monthly 2019 or 2020 payroll costs, up to $2 million.

Lutz stressed small businesses should not rely entirely on the Paycheck Protection Program.

“Everybody ought to be looking at local and state grants to help protect them in the meantime,” Lutz said.

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