Last Tuesday, Congresswoman Alexandria Ocasio-Cortez organized a virtual session to describe the two main programs for small businesses: the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP).
The EIDL program provides a loan up to $2 million, with no payments for 12 months, that can be used to help pay fixed debts like insurance or rent, payroll and accounts payable. Small businesses will have a 3.75 percent interest rate, while private nonprofits will have a 2.75 percent interest rate.
Small businesses can also apply for an EIDL advance of up to $10,000 that would not have to be repaid. The advance funds will be made available within three days of a successful application, according to the U.S. Small Business Administration.
“If you apply for the loan and get denied, you still get to keep the $10,000,” Ocasio-Cortez said.
The Paycheck Protection Program offers small businesses 100 percent forgivable loans up to two-and-a-half times their monthly payroll, up to $10 million. According to SBA, the program is designed to incentivize businesses and nonprofits to keep their workers on the payroll.
At least 75 percent of the forgiven amount must be used for payroll. The loan can also be used for interest on mortgages, rent and utilities.
“If you’re using these the right way, you should be exhausting these funds,” Ocasio-Cortez said.
The Queens and Bronx lawmaker added that businesses that already furloughed or let go of workers can quickly rehire or retain them and maintain their salaries.
She warned that if businesses reduce their payroll, or if the number of full-time employees is less than described in the application, companies could be knocked off of forgiveness.
“If you do not spend your PPP loan correctly, if you do not cover eligible expenses,” she said, “it will not be forgiven and you will be on the hook for paying it back.”
Congress has allocated $350 billion for the PPP, though Treasury Secretary Steven Mnuchin is reportedly seeking an additional $250 billion to boost the program.
Ocasio-Cortez said the program, which opened applications on April 3, will close on June 30. It is on a first-come, first-served basis. Small businesses can apply through federally insured institutions like banks or credit unions.
“I want you to apply for this program as soon as possible,” she said. “This is free money for you and your business if you spend it the right way.”
Earlier that day, the Queens Chamber of Commerce hosted a conference call with members of the Queens Congressional Delegation. They also discussed the EIDL and PPP, and how small businesses can seek federal aid.
Tom Grech, president and CEO of the Queens Chamber, said the organization has been hard at work trying to keep local restaurants afloat. The chamber started a website, QueensBest.org, which lists open restaurants by neighborhood.
The group is also having regular calls with neighborhood business improvement districts (BIDs) to share information and stay on the same page, doing daily blasts to members and advocating with local elected officials.
On the CARES Act, Grech said he was optimistic, given the size of the stimulus and the speed with which Congress acted.
“Now it’s up to us to execute this,” he said. “The pieces are in place.”
Members of the delegation addressed several issues with banks being overloaded with applications. Congressman Gregory Meeks noted they were in a “backup” because so many businesses have applied.
Meeks encouraged all small businesses to continue taking advantage of the program by going to the bank with which they’re most familiar. The three biggest banking companies in the area are Bank of America, Chase and Wells Fargo.
“I want to make sure everybody gets an opportunity to participate,” he said.
Congresswoman Grace Meng said that some banks are requiring a credit line or card with the bank to apply for a PPP loan. She said that isn’t “within the spirit of the law.”
Meng also noted that the city has several small business development centers, located on many college campuses, that are offering help to applicants.
“They have been walking through step-by-step to apply for these loans,” she said.
Congressman Hakeem Jeffries said Congress is already working on another phase of intervention to build on the CARES Act.
“We recognize that the needs displaced workers and small businesses have are great,” he said. “We must continue to act in a comprehensive and swift fashion so we can meet those needs.”
When asked how the coronavirus pandemic has impacted the multi-billion dollar renovations of New York’s airports, Meeks said the money is still in place for JFK’s new Terminal One. He said the project is “ready to go” as soon as the crisis is over.
As for the JetBlue and Delta terminals, Meeks said those projects may be delayed several months because they haven’t closed their deals yet. But he noted that the companies are “committed to getting it done.”
Chamber representatives also asked lawmakers how cities like New York that rely heavily on the tourism industry would recover. Members of the delegation said they would look into requesting more relief.
Meeks sounded a note of optimism that the city and its small businesses will “get to the other end of this.”
“We know that small businesses are the fabric of any community,” he said. “We can’t make it without you.”