New York

How NYC SMEs Get Short-Term Savings on PPP Loans

May, Eusebio Jerez tried three times to apply for a Paycheck Protection Program loan from a business bank, but gave up because he didn’t get a reply.

The owners of Jerez Jewelry in Corona, Queens usually employ five people and needed cash to pay their salaries during a pandemic.

“For some people, it was very easy,” Jerez said. “But for us it was never possible to get in touch with someone who could help.”

Jerez is not alone.

More than half of New York City microenterprise companies (those with less than 10 employees) finance under the Paycheck Protection Program, according to CITY’s analysis of newly released federal and US Census Bureau data under a court order. Received. Analysis shows that some regions were doing better than others, such as Corona, where loan rates are lagging.

The loan was part of a $ 695 billion national effort aimed at retaining workers’ employment as companies reduced or shut down their businesses after the COVID occurred earlier this year. If money is paid for eligible expenses such as employee salaries, mortgages, rent, and utilities, the loan turns into a grant.

Almost two-thirds of the loans made in New York City were directed to about 100,000 micro-enterprise companies, which employ a cumulative total of 291,000 workers. Their loans were similar because the business was small. That’s 16% of the $ 19 billion paid for all New York City businesses, covering a total of 1.5 million workers.

Owners of small restaurants, shops, grooming businesses, etc. say they have made a short change with PPP. The stakes of some owners have been raised again after Governor Andrew Cuomo announced last Monday that he would finish his indoor meal.

Micro-enterprise owners are looking for another PPP round that will make it easier to secure a loan.

“We need help before the vaccine arrives this winter,” said Sam Getz, owner of Judy’s, a coffee shop and bar at Sunset Park.

“It was confusing”

According to the US Census Bureau and the Small and Medium Business Administration, micro-enterprise is the most common type of company in New York City and the United States.

Still, owners are inadequate to deal with the Byzantine application process, which requires assistance from accountants and attorneys, useless mega banks, and program rules that initially prioritized large loans. It states.

“I was confused,” said Catrin Polari, owner of Clinton Hill’s Olivino wines. “And I have a college degree.”

Currently, COVID-19 infections and hospitalizations are on the rise in New York and across the country, raising concerns about additional restrictions on business in an already slowing economy. We hope to rely heavily on the new pandemic aid package being negotiated in Washington.

There is increasing pressure to allocate money to the smallest projects in the country, whatever the aid agreement.

A coffee shop in Bed-Stuy, Brooklyn, is calling on residents to support small businesses on December 11, 2020.
Hiram Alejandro Durán / THE CITY

“Without deliberate action from Congress, large companies will continue to dominate and small businesses will be left behind,” Brooklyn Rep. Nidia Velázquez said last week.

Velázquez was able to secure 25% of the money for companies with less than 10 employees under the Hero Law, which passed the House of Representatives in early fall but was stalled in the Senate.

A group of small business advocates, including Accountable.US, Main Street Alliance, and Center for Responsible Lending, all sought similar reserves and much simpler rules to allow loans to small businesses that lack staff. I did. Handles complex paperwork.

“We’re targeting small businesses, but PPP didn’t reach many moms and pop stores,” Lauren Hitt, a spokesman for Alexandria Ocasio Cortez (Democratic Party, Bronx), said in a statement. Stated.

Neighboring disparity

New figures released by the Small and Medium Business Administration indicate that the Queens and surrounding areas of the Ocasio Cortez district had difficulty accessing PPP funding after central Queens became the epicenter of the city’s COVID outbreak last spring. Is shown.

Less than 40% of the 9,800 microenterprise in Flushing, Corona, Jackson Heights and Elmhurst secure loans, and microenterprise in Central Brooklyn such as Clinton Hill, Fort Greene and Prospect Heights almost double access to funding Did. An analysis of THE CITY, 77% of the 3,300 businesses, shows.

No data was available on the number of eligible companies of any size applying for a loan.

Leslie Ramos, executive director of 82nd Street Partnership, a non-profit organization that supports local businesses in Jackson Heights, said many owners are not eligible for loans due to immigrant status. Others lacked the resources to navigate complex processes.

“They are good at selling, but they aren’t always tied to the news, and they aren’t good at submitting paperwork,” Ramos said. “They work 16 hours a day.”

However, federal officials pointed out their support efforts.

The Small and Medium Business Administration’s Atlantic Regional Office, which covers New York, New Jersey, Puerto Rico and the Virgin Islands, has hosted “hundreds of public forums” in multiple languages, including English, Hispanics and Mandarin, an agency spokesman said. Matt Coleman said.

Some experts also said the process was incomplete, but the program provided the coveted relief during the heyday of the pandemic in mid-April.

“Overall, the Paycheck Protection Program loan has achieved that goal,” said Greg Biryla, New York State Director of the National Federation of Independent Business, a small business advocacy group. “As soon as possible, I had to put money into my back account through the small business door.”

Only six days after the program started, the federal government made some changes after the first round of PPP payments was completed. Instead of paying 75% of the loan to salary, we lowered the threshold to 60%, allowing companies to use the money for rent and other expenses.

In addition, the program has expanded the range of lenders allowed to issue loans beyond retail banks.

“Retail banks didn’t prioritize their business over some of their more important customers,” Biryla said.

According to the data, financial technology company Kabbage and New Jersey bank Cross River Bank, which is strengthening its online lending platform, have issued more loans to local micro-enterprises than the Bank of America and Citibank, respectively.

Business saver for some

The owners of the loaned micro-enterprise called them heavenly blessings and acknowledged the team’s efforts to secure the funds.

Charwyn David, owner of Pooch Purrfect, a pet day care and grooming store on Washington Avenue, said: “Without PPP funding, I wouldn’t be in today’s place, which means it wouldn’t be open. Prospect Heights, Brooklyn.

When he heard about the program, he contacted a retail bank already in his business and filled out an application.

It didn’t go anywhere, he said.

“They kept telling me the same thing,” said David. “You are in the queue.”And I hear people getting money but nothing is happening [for me].. ”

After weeks of lack of news, David contacted Dale Charles, director of economic development and commercial leasing at IMPACCT Brooklyn, a non-profit group serving small businesses in central Brooklyn.

“When you need it, you start looking at your Rolodex,” said David. “I said,’What do you know? Let me talk to Dale.”

IMPACCT Brooklyn's Dale Charles will pack protective equipment for local businesses in Clinton Hill on December 11, 2020.

IMPACCT Brooklyn’s Dale Charles will pack protective equipment for local businesses in Clinton Hill on December 11, 2020.
Hiram Alejandro Durán / THE CITY

Charles advised David to look for a credit union or other small local bank because he encountered another bank that was misrepresented or rejected by the retail bank.

“The big bank was saying [microbusinesses] They were not qualified.They were the ones who kept in touch with me [I] Led them to a smaller CDFI [Community Development Financial Institutions]”Charles said. “And it helped a lot.”

According to Charles, her organization helped about 200 companies navigate the process by connecting with attorneys and accountants, as well as hosting webins and patrolling small stores nearby. is.

“I was able to hear the psychological stress on these business owners as they scrambled and tried to achieve their goals, but then sat down at the table for hours to apply for an application. You have to spend it, “Charles said.

Ask for forgiveness

Companies that have received temporary bailouts through the PPP Fund face another challenge. It’s about getting the government to allow you a loan.

As of November, two-thirds of the 600,000 companies nationwide that submitted forgiveness applications had some or all of their debt amortized.

Companies can apply for forgiveness through the lender at any time during the loan period. Owners are required to submit a variety of tax returns and forms, including a detailed receipt to confirm expenses, along with an 11-page application.

“Some companies couldn’t or were threatened with PPP loans without relationships with lawyers, bankers, accountants, and nonprofits,” Biryla said. “Currently, the same problem exists in the forgiveness process.”

Getz, the owner of Judy’s at Sunset Park, secured the loan after being rejected by five banks.

He said allowed loans, the city’s open street program, and outdoor dining in recent months helped him survive the first aftermath of the pandemic. But at the indoor dining, which ends on Monday, Getz sought further help.

“I didn’t like to apply for PPP every day,” Getz said. “But I’m definitely saying it’s time for PPP No. 2. What the federal government wants to do, but whatever they want to build it.”

“Most of us restaurant and bar owners wanted to find a way to serve people and do business again,” he said.

How NYC SMEs Get Short-Term Savings on PPP Loans

Source link How NYC SMEs Get Short-Term Savings on PPP Loans

Back to top button