MMore than 84,000 Long Island businesses and nonprofits have received a total of $10.5 billion in loans through the federal government’s flagship pandemic initiative, the Paycheck Protection Program, according to a Newsday analysis of the new data.
The PPP was launched to provide employers with the funds needed to keep workers on the job or to rehire them as the US economy was shut down in March 2020 to slow the spread of the coronavirus. Small businesses and their advocates have criticized banks and other private lenders for initially helping large corporations and publicly traded companies secure multimillion-dollar loans.
The situation improved in 2021, the second year of the PPP, as lenders increased the number of small loans to 77% of the total on the island, a sign that more aid was directed towards family businesses, according to the analysis.
“The numbers shifted to the little guy.”
-Eric Alexander, founder of the LI Main Street Alliance
“There was a harsh inequity that happened in the early weeks of the PPP when the loans went to the rich and didn’t reach the people who needed them most,” said Eric Alexander, founder of the LI Main. Street Alliance, which represents 45 city centers. which are being revitalized. The alliance, working with chambers of commerce, has helped educate small business owners about the relief program.
“Congress and the [U.S. Small Business Administration] made changes to fix PPP and everyone stepped up to help small businesses,” Alexander said. “The numbers shifted to the little guy. There was progress, not perfection” by the time the program ended in May 2021, he said.
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Bigger impact in 2021
The PPP had a greater impact in its second year in 32 low- and moderate-income communities, including Brentwood, Copiague, Hicksville, Glen Cove and Riverhead. Borrowers in these communities received about 12,800 loans in 2021, nearly a quarter of all loans made in the region that year, compared to about 9,550, or just 15% of the total in 2020, according to the analysis of data obtained under the Freedom of Information Act.
A Glen Cove-based nonprofit, SCO Family of Services, received a $10 million loan, the program’s maximum.
“If we hadn’t gotten this bailout, we likely would have cut programs and services — and that means cutting staff at a time when our customers needed us more than ever,” said Keith Little, president and chief executive. from the leadership of SCO, which cares for children, homeless people, people with substance abuse problems and people with developmental disabilities. The agency operates group homes and day programs.
“We were in panic mode when we applied for the PPP loan last year,” he said. “We were understaffed… We had to keep people and reward them for their willingness to work where infection rates were high.
The nonprofit organization, founded in 1895, has more than 3,000 workers on Long Island and New York.
While SCO’s loan was among the largest in Nassau and Suffolk, more of the region’s smaller businesses also received help in the second year of the PPP: 77% of loans granted in 2021 were below $50,000, down from 66% in 2020.
The amount of the loan was determined by the number of employees; a $50,000 loan indicates a business with less than a dozen employees. According to the analysis, one in five loans granted over the two-year period was less than $10,000.
The loans were repayable — that is, they could be turned into grants — if the money was used primarily for payroll and certain other conditions were met. If borrowers do not qualify for forgiveness, the loans, bearing an interest rate of 1%, must be repaid in two to five years.
According to the analysis, three-quarters of PPP loans made on Long Island were eligible for forgiveness as of April 4.
The PPP reached a more diverse group of borrowers after Congress and Presidents Donald Trump and Joe Biden set aside federal loan guarantees and exclusive application processing days for smaller and minority-owned businesses, among others. More sole proprietors and independent contractors without employees have also become eligible for the aid.
Second loan for some
While 84,000 establishments received PPP loans, more than 120,500 loans were issued in Nassau and Suffolk as 36,500 borrowers qualified to receive a second loan.
Cord Contracting Co. in Woodbury, specializing in interior construction, received the most: the maximum of $10 million for his first loan, plus a second loan of $2 million. The company had 272 employees when she applied, records show.
Another contractor, Island Acoustics LLC in Bohemia, was No. 2 with two loans, totaling $10.4 million.
Ten other large employers each obtained loans of $10 million. They understand the development Disabilities Institute, New York Health Care, Newsday Media Group, Sam Ash Music, Summit Security Services and Whitsons Food Service.
However, some businesses and nonprofits did not benefit from the PPP because it closed before their loan application could be processed, they lacked payroll records and other documents, or they threw in the towel. when the first bank refused them.
“A lot of smart people either didn’t know about this program or applied too late,” said Stephen Schwartz, senior consultant at financial advisory firm Asset Enhancement Solutions LLC in Uniondale, which has helped borrowers navigate the process. “A lot of people gave up when the financial institution didn’t give them a reason to reject their loan application.”
“All you had to do was Google ‘PPP’ to find a lender to help you.”
-Neil Seiden, President of Asset Enhancement Solutions LLC at Uniondale
Still, the increased participation of online-only banks such as Kabbage in the PPP last year has helped companies that didn’t have a multi-year relationship with a lender or had a checkered credit report, according to Neil Seiden, President of Asset Enhancement. He said the company helped secure 1,500 PPP loans worth $150 million for customers in 35 states.
Online banks “made things much easier in 2021 because all you had to do was Google ‘PPP’ to find a lender to help you out,” Seiden said. “Additionally, the SBA increased the minimum charge a lender could make on a PPP loan, so a lot of [online lenders] seeing that there was a huge amount of money to be made… The banks started taking everything; the amount of the loan did not matter,” he said.
Even with more lenders participating last year, the process of getting a PPP loan still took weeks, and in some cases, months.
“PPP loans have helped me maintain my staff…I would have struggled if I hadn’t received support from the government.”
-Alan Bernstein, owner of Hand & Stone Massage and Facial Spa at Hewlett
Alan Bernstein, owner of Hand & Stone Massage and Facial Spa at Hewlett, said he tried five times to submit a PPP application online to his bank, JPMorganChase, without success. Citibank refused it.
Finally, Bernstein was approved by Northeast Bank in Lewiston, Maine for a $103,565 loan in February 2021 and received a second loan three months later for the same amount. Both loans were canceled, he said.
“PPP loans helped me maintain my staff, giving them extra pay while they worked during the pandemic,” said Bernstein, who employs about 25 people at the business he opened in October 2015. after years of working in information technology for large banks. He had hoped the spa would make its first profit in 2020.
“I would have a hard time if I hadn’t received support from the government,” Bernstein said. “Instead, I’m back to where I was before the virus and looking for ways to grow my business.”