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By: Hadassa Kalatizadeh
In January 2023, Mayor Eric Adams’ administration had announced $75 million in funding for low-interest small business loans, aimed to boost businesses that struggled to receive aid during the pandemic or to obtain loans from local banks.
Dubbed the NYC Small Business Opportunity Fund, it became known as the “largest ever” public-private fund for small businesses, partnering with Goldman Sachs, Mastercard Center for Inclusive Growth and the Community Reinvestment Fund. Per Crain’s NY, it was slated to dole out loans at a below-market interest rate of 4% to some 1,500 businesses with loans ranging from $1,000 to $250,000 each. The initiative had been welcomed with such an overwhelming response that just three weeks after the launch, it had to be paused because so many applications already came in. By last February, over 10,500 small businesses had already applied, forcing the program to “pause”. A whopping 15,000 businesses expressed interest in applying for the low-interest loan.
As reported by Crain’s NY, over 1,000 small businesses have now been awarded loans from the fund totaling over $85 million. The fund is now wrapping up, after paying out low-interest loans between $2,000 and $250,000 to a total of 1,046 businesses. The number of actual awardees is smaller than the 1,500 estimated to be given loans under the plan. This is due to the fact that the average size of each loan was $80,000, which is a lot more generous than officials had expected, said Kevin Kim, commissioner of the city’s Small Business Services Department. “We had estimated that more businesses might come in asking for smaller amounts,” Kim said. “But because of the pandemic, because of the businesses that were wanting to grow really fast, needing a little bit of extra capital, it reduced the number [of awardees].” This also led the total amount of the loan to balloon up from the estimate $75 million to $85 million, thanks to additional generosity from Goldman Sachs, Kim said. The bank’s initial investment in the fund was $50 million. The city partnered with a total of eight community development financial institutions.
Some 80 percent of the loans were awarded to minority- and women-owned businesses, per Crain’s, which was a key condition set by the Adams administration. Business owners reportedly utilized the loans to hire new staff, take on new storefronts and refinance existing high-interest debt, as per the city’s Small Business Services Department. The loan fund was a one-time event and there are no current plans to replicate it. City officials say the best way for small businesses to find grants and loans is by using the online Funds Finder website as a one-stop listing service to locate grant and loan programs from the city, state and federal governments. Kim said the city is in talks with other businesses that expressed interest in funding similar small-business aid programs in the future.
“These loans, at the end of the day, are not just dollar signs but real investment in people and neighborhoods,” Kim said. “We would love as many partners as possible to come in and do the 2.0 version of this.”
