Another round of Paycheck Protection Program loans is needed by small businesses to survive until next year, especially gyms, restaurants and tourist attractions, Long Island executives said Wednesday.
A banker, real estate agent, farmer and winemaker each told state lawmakers how small businesses in Nassau and Suffolk counties have been hit hard by the shutdown of nonessential activity to slow the coronavirus’ spread. They said some businesses may close permanently if sales don’t rebound once the economy fully reopens, while others may never reopen.
In a virtual hearing, the executives asked members of the state Assembly to lobby Congress for additional federal loan guarantees, a second loan for PPP borrowers, and the extension beyond June 30 for PPP applications to be accepted by banks and other private lenders. The three-hour hearing is part of a series being held by five Assembly committees.
“The PPP program has been very helpful … [but] if we are to survive next winter we will need it to be extended,” said Kareem Massoud, president of Long Island Wine Country, a trade group representing 30 East End wineries. “We do not see business turning around enough to make it through to May 2021, the start of our next busy season.”
Massoud, whose family owns Paumanok Vineyards and Palmer Vineyard, said PPP loans sustained wineries that had to hire workers to tend grapes while tasting rooms were shuttered and weddings that would have taken place at their venues were canceled. Some wineries will see their sales fall more than 60% this year compared with 2019, he said.
There's some support on Capitol Hill for extending the PPP, but White House officials have said it’s too early to know if small businesses need additional help. The federally guaranteed loans are for up to $10 million per applicant with a 1% interest rate and five-year term. They may be forgiven in some cases. Newsday has received a $10 million PPP loan.
Kabir Javaid, director of Suffolk Home Rehab LLC, an affordable housing company, said applying for a PPP loan was "confusing and frustrating." He said none of the three local banks that he has relationships with would give him a loan. He’s now considering an offer from an online bank.
BNB Bank in Bridgehampton has made $1 billion in PPP loans to 4,000 businesses and nonprofits so far. However, CEO Kevin O’Connor expressed frustration that more than $100 billion in federal loan guarantees for the PPP haven’t been used and blamed critical newspaper stories.
Of the $659 billion authorized by Congress, $512 billion in guarantees have been used for about 4.6 million loans as of June 12, according to the U.S. Small Business Administration, which oversees the PPP. In New York State, $37.5 billion has been lent to 297,775 applicants. The agency hasn't provided Long Island data.
O’Connor on Wednesday praised recent PPP changes that give borrowers additional time to use the money and reduce the amount that must go to payroll expenses to have the loan forgiven completely.
“But more can be done,” he said. “We need to take some of the industries that were affected, like gyms and restaurants that couldn’t open and may have spent the money because they had eight weeks to do so, and let them go back and get more money.”