A bill designed to provide financial help for small business owners struggling to survive during the COVID-19 pandemic cleared its first hurdle when the Senate Finance Committee voted 8-4 to move it …
A bill designed to provide financial help for small business owners struggling to survive during the COVID-19 pandemic cleared its first hurdle when the Senate Finance Committee voted 8-4 to move it to the Senate floor for debate.
Senate Bill 3 would invest up to $400 million in Severance Tax Permanent Fund money into a new fund that business owners could draw on for a three-year loan to help them weather financial storms brought on by the COVID-19 threat.
"Our backbone of economic development in this state are these small businesses, our moms and pops … this is something we can do to help these small businesses hang on long enough until the recovery down the road," said Sen. Sander Rue, R-Albuquerque and one of three sponsors of the bill.
“A lot of these businesses have been hanging on by their fingers and we’re gonna see a lot of them go down quickly if we don’t offer them something to help sustain themselves," he added.
The legislation would allow business owners who can prove they took a substantial financial hit during the months of March and April the chance to apply for up to $75,000 with a payback interest rate no higher than the Wall Street prime interest rate — currently around 1.65 percent.
While many legislators on the committee praised the plan, several from both parties questioned the wisdom of cutting into the $5 billion-plus permanent fund, which takes in and invests severance tax revenue from the oil and gas industry and other sources, and helps shore up the state's general fund.
They questioned whether the Legislature should be investing such funds while it is trying to deal with a nearly $2 billion deficit that was in large part brought on by a drop in oil and gas production and the economic impact of the COVID-19 crisis.
Sen. William Burt, R-Alamogordo, said he did not like that the bill has no default criteria to ensure business owners who receive the loan pay it back.
“If you don’t have any skin in the game, the possibility of default is probably at a much larger percentage,” he said.
Sen. Jacob Candelaria, D-Albuquerque and one of the bill's sponsors, acknowledged as much, noting the state "ultimately" bears the responsibility for the loss if things don't work out.
But he said that is an investment he is willing to make, in hopes businesses can hold on and recover once the recession is over.
The bill also includes a $100 million loan offer for individual counties, cities and municipalities if they can prove that they have experienced at least a 10 percent decline in gross receipts tax revenues because of closures and other financial handicaps brought on by the pandemic.
According to figures Candelaria supplied to the committee, Santa Fe County would be eligible for such a loan, given it lost 17.5 percent, or some $882,000, in the past few months because of the pandemic.
Lawmakers in the House of Representatives introduced a companion bill, which members of the House Commerce and Economic Development Committee were slated to hear late Thursday night.
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