Small business owners on Long Island are angry and dismayed by the federal paycheck protection program, which was supposed to give them money to survive the business shutdown caused by the coronavirus pandemic.
Instead, the homeowners said they had been mobbed by banks and other private lenders who seemed only interested in helping longtime clients and state-owned companies. Homeowners complained about websites that wouldn’t accept loan applications and conflicting information from employees at the bank and the US Small Business Administration, which oversees the PPP.
With the program set to exhaust its second round of federal loan guarantees within days, not weeks, small business owners have said they are worried about their future.
“There is a tremendous amount of anger, frustration and disgust,” said Eric Alexander, founder of the downtown advocacy group LI Main Street Alliance, citing his survey of around 1,000 small business owners over five weeks. .
“Honest businesses that have never applied for a loan, have never been behind on payments to their bank, have been excluded from the PPP,” he said. “SBA-approved lenders have largely failed to process claims made to smaller businesses.”
The owners of Merokee Day School and Camp Inc. in Merrick approached four banks before one of them processed their P3 request. By that time, millions of people were ahead of them in the application queue nationwide.
School principal Tracey Ferguson said she hoped to get a PPP 2.0 loan after missing 1.0 when the first $ 349 billion in federal loan guarantees ran out in two weeks. This time around, $ 310 billion in guarantees were authorized by Congress.
“I found out very early on and kept calling my bank and they didn’t know,” she said. “I went to their website several times a day, but was never able to submit a loan application. I must have called the branch … about ten times, and no one was able to help me. It was horrible !”
Ferguson had the same experience with the bank where she has her personal accounts. She became even more frustrated after learning that other daycares, who had learned about P3 from her, had submitted loan applications.
Ferguson called a Massachusetts bank near her family’s vacation home and filed for a PPP after being told by three customer service reps that she didn’t need an account. About a week later, a bank agent told her that she would not consider her application for two weeks because she did not have an account. She later said she received an email stating that the Massachusetts Bank only accepts applications from existing customers.
Finally, on April 9, six days after the start of the PPP, Ferguson successfully applied to BNB Bank after opening an account. She said she needed $ 87,300 to call back 13 employees and pay them for two months.
Ferguson now finds himself stuck between BNB and the Bank of Massachusetts, which has just told him that the Merokee School’s loan application has been approved.
“I don’t know how I’m going to get the funds because the [Massachusetts] the bank doesn’t have any of my account information, ”she said on Monday. “I told them not to submit my application to the SBA because I was going through BNB. I’m not sure what’s going to happen. “
The Merokee School has an enrollment of approximately 75 children, from 18 months to Kindergarten. The last day of class was March 13, as parents increasingly kept their children at home to reduce exposure to the coronavirus.
Ferguson pays rent, utilities and other expenses from a reserve account his mother, Vivian Kanter, has always insisted on. Kanter founded the school in 1977 and still works there.
Ferguson worries about how the school will work in the future but swears it will reopen: “I’m not going to leave this [coronavirus] shut me up.
Six miles east in Massapequa, the owners of Simple Smiles Photography Inc. had given up on getting a P3 loan – then it happened on May 1.
“I didn’t think there was a way; that we were too small, ”said Doug Otto, who started the school class photo provider with his wife, Kathy, in 2006. Besides the couple, Simple Smiles employs four independent contractors.
Otto twice requested the PPP on the advice of his bank. He declined to disclose the loan amount, but said he would pay the couple’s salary for two months. “It’s enough to get us through,” he said on Monday. “I still can’t believe the money actually arrived.”
Separately, Simple Smiles received $ 2,000 from another coronavirus relief program: the SBA Economic Disaster Loans. This money “arrived on April 17 and was used quite quickly to pay business bills,” he said.
Otto said he would dip into the couple’s retirement savings to support the business until September, when he hopes schools will reopen. In the meantime, he used the couple’s $ 2,400 federal stimulus check to make a mortgage payment.
P3 applicants typically have 500 or fewer employees and can receive a loan of up to $ 10 million. The interest rate is 1% with a term of two years and the full amount is forgivable in some cases. Newsday secured a $ 10 million PPP loan.
In New York State, 245,346 PPP loans have been approved, for a total of nearly $ 38 billion as of May 1. The average loan amount is $ 154,694, according to the SBA. The agency was unable to provide data for Long Island.
The PPP is “critical in the short term and can be a lifeline for millions of small businesses facing intense pressure,” said Greg Biryla, New York director of the National Federation of Independent Business, which is lobbying on behalf of entrepreneurs.
A nationwide survey of 885 of the group’s members found that three-quarters applied for a PPP loan, but only 20% received funding before the first round closed on April 16.
NFIB Research Director Holly Wade said: “Small businesses were prepared and ready to apply… It is very frustrating that the majority of these true small businesses have yet to receive their loan.
Some entrepreneurs are looking for alternatives to PPP.
Tim McCarthy and Brian M. Adams don’t have the tax and payroll records to apply for a PPP loan because their new bar, Daisy’s Nashville Lounge in Patchogue, was only open four days before non-essential businesses closed to slow the spread of the virus.
The couple said they have invested more than $ 500,000 over six months in the country western honky-tonk, which features a large bar, a mural by Johnny Cash and photographs of other Grand Ole Opry stars on the walls. They fired the 20 employees because offering take-out service is inconvenient for a bar that most people have never had the chance to visit, they said.
“We don’t qualify for P3 because you need the payroll from the previous year, and we only had four days of pay,” McCarthy said. “Our banks are trying to find a program that would work for us, but we’re sort of pulling out. We can’t go anywhere with the SBA. They are overwhelmed, ”he said.
McCarthy said he was pursuing all the loan and grant programs he had heard of and applied for a disaster loan from the SBA. He said he was disappointed that the US Chamber of Commerce’s $ 5,000 grants ran out minutes after the chamber opened an online application portal on April 20.
Business partners are now focusing on sources of finance for new businesses.
“We want to pay off our debts and move forward when we reopen,” Adams said, adding their landlord has been accommodating to rent payments. “We are not looking for handouts or a loan discount. We are looking for a low interest loan, ”he said.
The pair said they need around $ 300,000 “to get us to where we need to be.” They’re counting the days until Daisy’s Nashville can put on a grand opening ceremony and the line dancers speak again.
“It’s the saving of a person’s life, the time and effort you put into it,” Adams said. “It’s a little scary, but we won’t give up until we get a loan.”