NY Term Loan Now Open to Businesses and Nonprofits That Have Obtained PPP Funds
Small businesses in New York State that received Federal Paycheck Protection Program loans of $ 50,000 or less are now eligible for a state loan program due to rule change announced last week.
New York Forward Loan Fund lenders have been asked to reconsider applications from small businesses that were initially rejected because they received PPP loans, said Eric Gertler, CEO of Empire State Development, the agency’s agency. State overseeing the $ 100 million fund. Lenders are also accepting new requests.
The change comes as small businesses struggle to stay open with their depleted PPP money. Hope has faded that Congress and President Donald Trump will come to an agreement on a new round of P3 loans ahead of the November election.
The federal government’s flagship coronavirus program for businesses ended on August 8, with banks and other private lenders providing 5.2 million federally guaranteed loans worth $ 525 billion. However, nearly $ 134 billion in collateral went unused, according to the US Small Business Administration, which oversees the PPP with the Treasury Department.
The term loan fund was launched by Governor Andrew M. Cuomo in May and nearly 11,000 applications have been received from eligible borrowers as of September 27, including 2,231 from Long Island, ESD said Monday.
Yet only a small number of loans have been made – 216 statewide, totaling about $ 9.6 million.
Some applicants declined the offer of a term loan because it has a 3% interest rate compared to PPP loans, which have a 1% interest rate and can be canceled, said ESD officials. In addition, PPP loans are larger, up to $ 10 million per applicant, compared to $ 100,000 for term loans.
Gertler, announcing that some PPP borrowers were eligible for term loans, said: “Providing assistance and opportunities to – especially minority and women owned businesses in our state – to help them reopen is essential for revitalizing our economy and rebuilding New York. better. “
At least 60% of term loans must go to women and minorities, and 18% is reserved for Long Island borrowers.
Term loans were originally intended to help businesses, nonprofits, and small homeowners who could not get PPP loans. But “through discussions with lenders and applicants, it became clear that PPP loans did not go far enough… Often, PPP amounts were a fraction of what was needed and requested,” ESD said.
Nearly 348,900 New York businesses have obtained PPP loans, for a total of $ 38.7 billion. The average loan was $ 110,929. More than 66,640 loans have been made in the four congressional districts that encompass Long Island, according to a Newsday analysis of loan data. Newsday received a $ 10 million PPP loan in April.
This is the second major change in the eligibility conditions for term loans. In July, ESD said businesses and nonprofits that only receive the Advance Grant for an Economic Disaster Loan, or EIDL, can apply. More information can be found at nwsdy.li/NYFLF.
On Long Island, 54 applications for term loans were approved as of September 27 by community development financial institutions. The loans have gone to 51 small businesses and three owners, 44 of whom are women and minorities, ESD said Monday.
Career coach Trisha Kusinitz used her loan, valued at between $ 10,000 and $ 15,000, to maintain Work-Shop Babylon, a collaborative workspace and career resource center in Babylon Village. She also owns tkSolutions Coaching LLC, also in Babylon Village.
“I don’t think I would be able to continue with physical space if I hadn’t gotten the loan,” Kusinitz said last month.
To be eligible, businesses and nonprofits must have 20 or fewer employees, have an annual gross income of less than $ 3 million, and be profitable. Landlords must have fewer than 50 apartments in each building and not own more than 200 apartments in total.
Borrowers have five years to repay the term loan, with the first year being just 3% interest payments for businesses and homeowners and 2% for nonprofits. No guarantee is required.
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NY TERM LOANS AT A GLANCE
Funds available: $ 100 million from seven banks and four foundations, including BNB Bank in Bridgehampton
Maximum loan amount: $ 100,000
Term and interest rate: 5 years with an interest rate of 3% for small businesses and owners, 2% for nonprofits
Responsible for processing loan applications: five community development financial institutions; local businesses and nonprofits should apply to the National Development Board; and landlords to Community Preservation Corp., both located in Manhattan.
THE SOURCE: Development of the Empire State