Businesses struggle with provisions of Payroll Protection Program

LACONIA — A federal program has saturated the New Hampshire economy with loans intended to save jobs, but some businesses are finding it’s no easy matter to rehire workers.

On Thursday, the state released a “COVID-19 Affected Unemployment Rate” for Belknap County of 24.6 percent, second only in the state to Carroll County'sh 26.5 percent.

Some businesses remain shuttered under emergency orders intended to limit the spread of COVID-19.

Others are finding that employees are reluctant to come back because unemployment compensation is higher than their old paycheck or because they fear catching the disease.

Also, some business owners worry that fears about the disease could keep consumers at home, leading to a decline in business activity and a reduced need for workers.

consumer fears about the disease could keep them at home, leading to a decline in business activity and a reduced need for workers.

More than 25,000 New Hampshire businesses have been awarded a total of nearly $3 billion in 1 percent interest loans through the U.S. Small Business Administration’s Payroll Protection Program, according to Rachael Roderick, acting director of the SBA’s district office.

Two months of payroll and select expenses can be forgiven from the loan, but the catch is this amount must be spent within two months of receiving the loan.

Allan Beetle is an owner at Patrick’s Pub & Eatery in Gilford, which had to shut down its dining room under the state’s emergency orders.

“There are competing forces at work,” Beetle said. “You have a huge drop in business, so you have a huge drop in staffing and because of that, your forgiveness percentage is significantly reduced.

“So you can bring people on board, but you can't bring people on board to sit around and do nothing. Wherever you can add value with staff, that's what we're doing.”

He has been maintaining a take-out operation and will be allowed to offer outdoor dining in an existing patio area and in his parking lot starting Monday.

A $600 federal enhancement to unemployment compensation, in addition to what the state had been offering, means some people are receiving nearly $1,000 per week while off the job.

“We’re competing with unemployment,” Beetle said. “If you’re going to ask somebody to come back, it better be for steady hours.”

Beetle said he hopes the program will be modified to allow more flexibility on the timing for loan forgiveness.

Downtown restaurateur Reuben Bassett said Payroll Protection Program loans were approved for Burrito Me, Local Eatery and Wayfarer Coffee Roasters.

He plans to maximize outdoor seating starting Monday. Money from the loan program has allowed him to take care of loyal employees.

“If you have bonuses to pay, now is a good time to pay them,” he said. “The guys who stuck with us and are putting in hours, their time card may say 30 hours, but it feels like considerably more because of how things are operating. We’ll pay them more than we normally would because of the added stress.”

He wonders what will happen to the economy after the SBA loan money and the enhanced unemployment compensation concludes. Governmental prohibitions on foreclosures and evictions will also eventually lapse.

Ron Magoon, president and chief executive officer of Franklin Savings Bank, said another question is whether people will ultimately change the way they spend disposable income.

“That's the biggest question. Even when we return to normal, how quickly will people want to return to restaurants, theaters and concert venues? How many businesses will be in a position to reach pre-pandemic levels and maintain their businesses. It will be incredibly challenging.”

Meantime, the Payroll Protection Program is propping up business operations and has been so well utilized in New Hampshire that demand for the loans is drying up, Magoon said.

“Requests that I’m seeing now are really much smaller,” he said. “They are probably smaller companies without a CPA or an attorney.

“I have approved a lot more this round that are in the $1,000 to $10,000 range. But in my opinion, some of those loans for $2,000, $5,000 or $10,000 are having a big impact.

“This is definitely a program that has worked in rural communities in New Hampshire.”

His bank has been working with loan customers through the drive-up line of its Tilton office.

“Clients have told us the loans were unbelievably, incredibly appreciated, and without the PPP loan they would not have been able to keep open.”

Kristy Merrill, president of the New Hampshire Bankers Association, said some companies have shied away from these loans because of uncertainty about the forgiveness provisions.

“There has been a lot of anxiety from businesses,” she said.

After some high-profile cases in which the loans were given out to large businesses, such as the Los Angeles Lakers, the government said it would audit some of the larger loans to make sure they went to small businesses as intended.

The Laconia Daily Sun and other news organizations have requested a list of loan recipients, but the government has not complied.

Merrill said that on Wednesday night the U.S. Treasury Department and the SBA provided guidance that if the loan was for less than $2 million, the borrower would have a “safe harbor” from an additional level of review.

Merrill said the banks themselves are solid, having been in a good position in terms of capital and liquidity before the pandemic.

But they have been busy. In addition to administering the Payroll Protection Program loans, they have been working with consumers on modifications to mortgage loans to allow people to work through current financial issues.

This is all being done with restricted face-to-face access between customer and banker because of the pandemic.

“It’s amazing what you can do in a drive-through,” she said.