President Biden’s two-week window for small business loans could be less effective in Mesa
On Feb. 21 President Biden announced a two-week grace period starting Feb. 24 in which businesses with under 20 employees could receive preferential loans through the nation’s Paycheck Protection Program (PPP). Yet this measure, taken to prevent large corporations from taking the majority of available loans, could provide less benefits than expected for Mesa businesses, according to one local lender.
“It would have been better to put that money towards education in the communities,” said James E. Christensen, CEO and President of Gateway Bank. “Just as far as ‘Hey, did you know you could apply for this?’ Because I do think there’s probably some companies that won’t be a part of this round that could be, but they just don’t know, and the word has not gotten to that community that the money is even available.”
According to Christensen, the biggest new change in this round of funding isn’t the preferential lending window at all, but instead the lifting of lending restrictions for people with previous felony convictions unrelated to fraud, people who have defaulted on their school loans, and lawful U.S. non-citizens with a tax Identification number. A push the Biden administration made in the name of equity.
“You are looking at a pretty small target right there,” Christensen said. “Most of the companies with 20 employees or less that didn’t have the felony issue, that didn’t have a defaulted loan, or were citizens, they’ve already applied for round two and probably got handled the first week we did PPP loans.”
This expansion of PPP is the third time additional funding has been provided to help businesses across the nation survive the COVD-19 pandemic. Initial PPP funding of $349 billion, provided through the passing of the federal CARES Act in spring of 2020, ran out of money just two weeks after being allocated — with some arguing large corporations had taken an unfair share.
“In round one I would agree with that. I would definitely agree with that,” said Christensen. “In round two, by far the large majority of the loans went to the small businesses. I mean like 85 to 86% of them.”
The second round of PPP funding, which emphasized lending to small businesses who were experiencing losses in revenue, provided $310 billion dollars. The funds continue to be designated specifically to help fund payroll costs, benefits, mortgage interest, rent, utilities and worker protection costs related to COVID-19. They are forgivable if the company uses at least 60% of the money on payroll costs.
A business community survey conducted by the Mesa Chamber of Commerce in February found that 60% of the respondents applied for the first round of funding in the PPP program. For round two, 66% said they had applied or were thinking about applying.
“That tells us within our business community there is still a very significant need for support,” wrote the Mesa Chamber of Commerce in response to the new round of funding. “We applaud the efforts of the Federal Government to continue to work to make that support more accessible over time as the need has become more accurately defined.”
Jarrod Martinez, owner of Jarrod’s Coffee, Tea and Gallery near Main Street and Country Club, said he has applied for this latest round of loans and is just waiting to hear back.
“The hardest part is sticking with it. You know, you doubt, because your business has gone down more than 50%, but we’re just trying to build it back,” said Martinez.
Martinez, who started his business five years ago, said the community has been very supportive of his business through the pandemic.
“Our locals really support us. The City of Mesa supports us as well. The Mesa Cares program has helped us a lot, and also the available grants as well. All those things have helped keep us alive,” Martinez said.
Martinez said he should hear back within the week about the new loan. His business, both a coffee shop and an art gallery, was crowded with customers drinking coffee and chatting amid the afternoon rush.
Two doors down, Elisa Ribeiro, owner of Sonoran Moon Vintage, just opened up shop last week. She said that even in the face of a pandemic, she would urge other people to do the same.
“It’s pretty exciting. I never thought I would do this,” Ribeiro said. “There’s a big revival happening here. There’s a lot of new businesses coming in, and it is still somewhat affordable for us. The resources in Mesa have been outstanding.”
The sentiment that this is the time to start a business was also echoed by Christensen.
“Now’s the time. Other businesses are phasing out, but that leaves room for new people,” Ribeiro explained.
The Consolidated Appropriations Act, 2021, signed by former President Trump in late December, laid the groundwork for this new funding. This time around, PPP funds will be available until March 31 or until the funds run out.
Editor’s note: The original story date is March 8. Due to newspaper and college-wide technical difficulties, this story is now made available on April 16.
