Puerto Rico nonprofits and small businesses received less in federal aid stemming from the federal Coronavirus Aid, Relief, and Economic Security Act than these sorts of entities did in U.S. states.
According to a study by Puerto Rico’s Center for a New Economy of the federal Paycheck Protection Program, Puerto Rico has 1% of the U.S. population but received just 0.17% of the loans by count and 0.19% of the loans by amount. The center released the study in English and Spanish on Monday.
In response to the arrival of the COVID-19 virus on the island, on March 15 Gov. Wanda Vázquez ordered most businesses and government functions closed and people outside of the operating functions to stay at home besides visits to groceries, pharmacies, doctors and banks. These restrictions continue on the island though there has been loosening for hardware and auto repair shops.
In the program, which is part of CARES, the U.S. Small Business Administration guarantees loans to small businesses and nonprofits. If the money is used to pay payroll, healthcare and insurance benefits, rent, utilities and/or interest on debt, and the entities maintain staff, the U.S. government will forgive the loans.
Puerto Rico ranked 52nd out of 56 jurisdictions (the 50 states, the District of Columbia and the five territories) in amount received. This meant 21 jurisdictions with less population than the island received more money.
Evercore Director of Municipal Bond Research Howard Cure said: “This could be a case where without direct representation in Congress, on one can advocate for Puerto Rico small business aid. A disproportionately small amount of aid is yet another hindrance to Puerto Rico’s recovery.”
Estudios Técnicos Chairman José Villamil said: “It is true that Puerto Rico wasn’t as successful as some other places although some $658 million in loans was approved. There are a number of reasons: only four banks were active (fewer than in all states); many small businesses simply had no idea of how to go about applying to SBA, and many others had already closed or at least reduced their work force.
“The Savings and Loans Co-ops did not receive the SBA approvals until very late in the game and they are the financial entities best positioned to deal with small- and medium-sized enterprises,” he said.
“Obviously, this will impact future recovery efforts and it is reasonable to assume that many smaller and some not so small businesses will not survive. Whether they would have survived with the SBA PPP loan is difficult to say because many things enter into the equation. A new fund allocation for the SBA program is almost certain and I anticipate that this time around Puerto Rico will do better,” Villamil said.
In other news related to Puerto Rico’s economy, the governor said Tuesday that she was formulating a policy to slowly open the island’s economy.
Economic advisory and medical advisory councils are contributing to the creation of the policy, she said.
