City Comptroller Aims to Get NYC Small Business Owners a Bigger Chunk of the $284B in Covid-19 Funding

By: Fern Sidman

As small businesses are still reeling from the economic meltdown caused by the coronavirus, some good news is at hand. This week the Small Business Administration in consultation with the Treasury Department, reopened the Paycheck Protection Program (PPP) for First Draw PPP Loans . The SBA began  accepting applications for Second Draw PPP Loans on January 13th.

To promote access for smaller lenders and their customers, the SBA will initially only accept Second Draw PPP Loan applications from participating community financial institutions (CFIs), which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries.

Paycheck Protection Program lending will reopen to all participating lenders shortly thereafter. At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.

The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan.

Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

For New York City based business owners, mayoral candidate and City Comptroller Scott Stringer has announced a plan to help small businesses in the Big Apple to receive a hefty chunk of the $284 billion in Covid-19 funding.

According to a Post report, Stringer has called on City Hall to compile “a comprehensive list” of financial institutions with access to the federal Payroll Protection Program funding to share with small businesses. His plan includes employees from the New York City Small Business Service agency to pay personal visits to mom-and-pop shop owners in order to encourage them to apply for the funding. For business owners in immigrant communities in which English may not be their first language, Stringer would like to see efforts made towards bilingual outreach.

At an event in Chinatown on Wednesday, the Post reported that Stringer said, “We cannot lay back and think that people are just going to get this funding. It didn’t happen last time and it won’t happen again unless this city government mobilizes.”

Despite the fact that New York City saw the severe brunt of the coronavirus during the first round of the Paycheck Protection Program, many small business owners saw very little in terms of disbursements in the  government’s stimulus spending.

Stringer has said that  a mere 12 percent of New York City’s 1.1 million eligible businesses received funding last year despite the fed’s having doled out $522 billion to help small businesses survive the pandemic and keep people employed, as as reported by the NY Post.

In other states such as Nebraska ,it was reported that 24 percent of businesses in the Midwest state received funding, even though they did not even come close to the devastation that New York City had endured because of the rampant spread of the virus.

Stringer added that “when you look at who got PPP borough by borough, we saw even more disparity. When I ran the numbers we found that more than 60,000 businesses got loans, versus less than 10,000 in the Bronx. Businesses say the applications were complicated and restricted them, or they simply didn’t know about the program. This is unacceptable.”

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

o             Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses

o             Has no more than 300 employees; and

o             Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020