Investment

Economic disaster loan program fails in New Hampshire

Some 126 New Hampshire businesses – less than one in 200 – have received emergency loans directly from the US Small Business Administration, according to figures released by the agency earlier this week on its website.

Over 3,700 companies have received grants with an average value of less than $ 4,650.

The $ 10 billion economic disaster loan program was originally based on a program created for local disasters like a hurricane or flood. It was supposed to be an interim measure to help small businesses devastated by the coronavirus pandemic while the more complicated wage protection program – involving SBA-approved banks – rolled out from April 3. The two programs ran out of money on April 16, and Congress is expected to approve a package to replenish them this week.

The PPP program – which had its own problems – reached more businesses faster with more money. The two-year 1% PPP loans – up to $ 10 million – will turn into a grant as long as the company spends the money on matching payroll and other necessary expenses.

In New Hampshire, the Concord SBA office approved some 11,682 such loans to New Hampshire businesses, for a total of $ 2 billion.

Little information

The EIDL program – predating the CARES Act – promised loans of up to $ 2 million at an interest rate of 3.75% over 30 years. The CARES law, which was enacted on March 27, awarded grants of up to $ 10,000, stipulating that aid was due in three days.

None of this happened.

Instead, the SBA was overwhelmed, according to an official webinar, with 3 million applications in the first week. The loan amount – according to a leaked press release – has fallen to $ 15,000, and the grant, according to the SBA district office in Massachusetts, would be capped at $ 1,000 per employee. The office, however, did not manage the loans.

This was done by the SBA national office which shared little information with district offices, let alone with the public or the candidates themselves.

There are other reasons for the problems besides the overwhelming number of apps. The SBA had to streamline its website to handle the volume. And the rules changed halfway when the advance was included. That meant those who applied before March 30 had to do so again, Rachael Roderick, acting director of the SBA in New Hampshire, told a webinar.

New Hampshire, which has obtained more than its share of P3 loans – perhaps because of the zeal of local banks – matches the national average for the EIDL program. Nationally, fewer than 27,000 loans have been approved for a total of less than $ 5.6 billion, for an average loan of $ 205,000.

New Hampshire businesses have taken out a total of $ 27.6 million in loans, an average of over $ 219,000, or $ 14,000 more than the national average.

Just over 750,000 US companies have obtained loan “advances” or grants – about 12.6% – for a total of $ 3.3 billion, or an average grant of $ 4,360.

According to Roderick, the agency is still processing some loans and would continue to process them if the program was replenished.

In New Hampshire, the SBA made 3,715 EIDL advances totaling $ 17.3 million, an average grant of $ 4,658 – the ninth highest average in the country.

A poll released Tuesday by the National Federation of Independent Businesses indicated that most companies were ignorant of EIDL. On Friday, 1% of 885 responses received EIDL funds, compared to 20% who received PPP money.

These articles are shared by the partners of The Granite State News Collaborative. For more information, visit collaborativenh.org.