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More federal money is coming into New Hampshire’s economy during this pandemic — so much that it is difficult to figure out how to spend it or, in some cases, whether the state even needs all of it.
The $1.9 trillion American Rescue Plan Act signed into law on March 11 by President Biden, just as we are digesting the $900 billion Consolidated Appropriations Act, passed in December. And that came after three bills totaling $2.5 trillion, including the CARES Act, which were enacted after the Covid-19 pandemic first hit.
“It’s a lot of money,” said Business and Economic Affairs Commissioner Taylor Caswell, who also doubles as head of the Governor’s Office for Emergency Relief and Recovery (GOFERR), the agency tasked with spending the federal money in the past. But this time the rules are different, Caswell said. Most of it doesn’t have to be spent right away.
“Last time, it was more relief — our goal was to keep as many people’s heads above water.”
Indeed, it’s unclear whether an emergency agency should even be spending it.
“I think we are looking at this new fund as having more of a traditional flavor” that involves the normal legislative process, though he noted that it’s too soon even to tackle that decision until more regulations emerge from Washington.
Support for businesses
This time around, the aid includes nearly $1.1 billion in direct funding to the state (including capital projects), an estimated $458 million headed to counties and municipalities, and $350 million to school districts. In addition, there’s nearly $1.5 billion in $1,400 direct payments to individuals and somewhere north of $50 million in $300 supplemental unemployment programs.
As for New Hampshire businesses, the latest package includes continuation and expansion of the Paycheck Protection Program, which has so far pumped more than $3.5 billion into the state’s economy. The December legislation pumped another $284 billion into the PPP, and the American Rescue Plan added another $7.5 billion. At deadline there is still roughly $80 billion left in the PPP, with the application deadline extended to May 31.
New Hampshire businesses also have received $58 million in Economic Injury Disaster Advances and another $681 million in Economic Injury Disaster Loans.
The American Rescue Plan also doubled the employee tax credit from two quarters to four quarters retroactively. This means that employers who suffered a 20% quarterly revenue loss in 2020 compared to the similar quarter in 2019 can deduct from their payroll taxes $7,000 per employee each quarter (or $28,000 for the year). And even new businesses can get into the act. But since there is no 2019 revenue for them to compare it to, businesses are limited to two-quarters of $50,000 in credits.
And before December, businesses that received PPP loans couldn’t take the credit. Now they can, although they have to show a 50% quarterly revenue decline.
The American Rescue Plan also extends tax credits to two-thirds of an employee’s salary (up to $12,000 per worker) for companies with under 500 employees that offer Covid-related sick leave and paid family leave or time off to seek Covid testing or to leave for those sidelined by the virus.
Restaurants and venues
The American Rescue Plan also has a new $28.6 billion program for restaurants. The parameters of the Restaurant Revitalization Fund weren’t published by deadline, but the law sets aside about $5 billion for restaurants with less than $500,000 of receipts. Restaurants can receive as much as $10 million per entity, or $5 million per physical location. (Chains are limited to 20 locations, and publicly traded companies are not eligible.)
The money can be spent on payroll and benefits, mortgage, rent, utilities, maintenance, supplies (including PPE and cleaning products), food and beverages, supplier costs, operational expenses and paid sick leave.
The Rescue Plan also adds $1.25 billion to the Shuttered Venue Operating Grant program to help the entertainment industry, bringing the total SVOP allocation to $16.25 billion.
And last but not least, there is the $10 billion revival of the State Small Business Credit Initiative created during the last recession under President Obama. The New Hampshire Business Finance Authority got $13 million last time. This time, it could get at least $50 million and might even get as much as $100 million. The BFA’s total capital pool at the moment is $78 million.
The SSBCI is made up of five individual loan programs, which begs the question: With all the grants, credits and forgivable loans available, why would anyone want money that they would have to pay back with interest?
“There’s definitely a need out there,” said James Key-Wallace, the BFA’s executive director. “Whenever there is recovery from economic shock there is lag in the credit markets. Businesses by nature and regulations look forward. Banks by nature and regulations look backward. You want to borrow money, tell me what you did last year. And that could restrain recovery in the long run.”
What SSBCI does is leverage private money. Nationally, according to a congressional report updated on March 23, the program leveraged $8.95 for every $1 of SSBCI funds. New Hampshire ratio, said Key-Wallace, was closer to 10 to 1.
SSBCI programs include the Capital Access Program, which guarantees loans of up to $200,000, and the Loan Reserve Guarantee program, larger loans that have to be approved by the governor and Executive Council or loans offered in conjunction with regional development corporations.
It’s not clear whether this new round of funding — the most the agency has every received — will simply continue former programs. The wording is vague, though there are some specific set-asides, including $500 million for very small businesses (under 10 employees) and the same amount for technical assistance. The funds won’t come all at once but in three phases, and the BFA has until 2030 to spend it.
“It could increase these resources by 50 percent,” said Key-Wallace. Then, echoing Caswell, he added, “It is a substantial amount of money.”
Bob Sanders can be reached at email@example.com.
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