SIC Recovery Fund
The New Mexico State Investment Council (SIC) has finalized a $100 million New Mexico Recovery Fund (the “Fund”) program to help businesses stay afloat during the COVID-19 outbreak. The SIC will make two- to four-year loans of between $500,000 and $10 million at rates ranging from 3% to 10% from the Fund to businesses that employ 40 or more workers and meet other qualifying criteria. Loans from the Fund are not grants, and will not be subject to forgiveness in the future. The names of businesses that receive loans from the Fund, as well as the amount of each loan, will be disclosed publicly.
Sun Mountain Capital, located in Santa Fe, will manage the Fund, and leaders from the company have indicated that the first loans from the Fund may be made available as soon as the next few weeks. For more information and eligibility criteria and requirements are available online.
Additional Federal Disaster Relief for Small Businesses
The New Mexico Economic Development Department is encouraging New Mexico small businesses in financial distress due to COVID-19 to apply for loans made available under the federal stimulus bill (the CARES Act) as soon as possible. Businesses have until June 30 to access the money, and loans will be made on a first-come, first-served basis. Businesses can apply for the loans made available under the stimulus bill online or submit applications at any of the 19 Small Business Development Centers in New Mexico, where personnel are offering instruction and guidance on how to apply.
In addition to the federal stimulus, the New Mexico Economic Development Department has created loan-guarantee and no-interest loan programs for businesses. More information on these programs is available online. NMEDD has rolled out other help as well, including the “Buy Today for Tomorrow” campaign. When businesses register for the program, they give New Mexicans the chance to buy vouchers today that can be used later when the businesses re-open, providing much-needed cash flow during the isolation period.
Update on Paycheck Protection Program Loans
As mentioned in last week’s client alert, small businesses have been able to apply for a Paycheck Protection Program Loan made available under the CARES Act as of last Friday, April 3. Since then, several businesses have applied for Paycheck Protection Program Loans with approved and participating lenders, and the volume of applications has created a bottleneck effect. Several loans have been approved, and some banks have reached their lending caps. As was anticipated, the Federal Reserve has increased the cap for some of the banks that have already capped out, as it did with Wells Fargo on April 8.
It is unclear how many Paycheck Protection Program Loans have come back to the State, and it does not appear that any New Mexico businesses have been successful in receiving any of the relief money yet. Businesses can apply for a Paycheck Protection Program Loan with any approved and participating lender, but if there is no preexisting relationship between the business and the lender, the loan application will likely involve a more thorough process. Approved and participating lenders have just received a new form, Form 147, from the SBA that serves as a promissory note or guarantee from the SBA for the Paycheck Protection Program Loans that will be used in the loan application process.
Department of Labor Issues Temporary Regulations and Guidance
Earlier this month the U. S. Department of Labor (“DOL”) issued temporary regulations and guidance regarding employers’ obligations under the Families First Coronavirus Response Act (“FFCRA”). The temporary regulations became effective on April 1, 2020 and expire with the FFCRA on December 31, 2020. Among the issues discussed in these new documents are:
• Restatements (and simplification) of employer requirements for emergency paid sick leave (“EPSL”) and emergency family and medical leave (“EFML”)
• Definition of “regular rate” for purposes of calculating paid leave under the FFCRA. This means looking at the average regular rate over a six-month lookback, or the entire period of employment, whichever is shorter and dividing the average weekly regular rate by the number of hours worked each workweek.
• Discussion of the small employer business exemption. Employers must make an individualized determination that requests for FFRCA leave will jeopardize the business’ viability.
• Clarification of which employees qualify for FFCRA leave. There are both health care provider and first responder exclusions which employers may apply.
• Clarification of the amount of EPSL or EFML an employee can take
• Discussion of the rights of returning employees and of the circumstances under which return to work can be denied
• Confirmation that DOL enforcement does not begin until April 17, 2020 so long as employers are making reasonable good faith efforts to comply with the FFRCA
The full text of the temporary regulations and guidance can be obtained from the DOL website at www.dol.gov.