U.S. Small Business Administration officials urged Long Island business owners on Friday to start seeking assistance under the second federal stimulus package, even though details of some initiatives are still being hashed out.
Under the latest version or "draw" of the Paycheck Protection Program, businesses that seek a second loan may have more flexibility in how they spend 40% of the funds, including on items like personal protective equipment and cloud and software expenses, according to John Mallano, deputy director of the SBA's New York District.
Mallano noted that companies seeking a second PPP loan must have no more than 300 employees and have sustained gross receipt losses of at least 25% from one quarter of 2020, compared to the same quarter in 2019, or from 2020 to 2019. The maximum loan depends on payroll, but caps out at $2 million, according to the SBA.
"You may not get an approval as quickly" this time around, Mallano said during a Newsday/Long Island Association webinar moderated by Newsday economics writer James T. Madore. He noted that additional steps may be taken to combat fraud. "They may be doing a little bit more background checks."
PPP loans are federally guaranteed and made by banks and other private lenders with a 1% interest rate and five-year term. They may be forgiven if certain rules are followed.
SBA officials also discussed Economic Injury Disaster Loans at the webinar. EIDL comes from SBA with an interest rate of 3.75% for businesses and 2.75% for nonprofits and a 30-year term.
EIDL is open to organizations that have not previously applied, with a new deadline of Dec. 31, 2021, or whenever funds run out, according to Robert Piechota, branch manager of SBA's Long Island Office. The maximum loan amounts to six months of working capital, according to the SBA.
And Piechota urged speed. "Our recommendation always is to apply," he said. "If you receive the funds, you don't have to accept them."
He said many people have asked if emails seeking corporate meeting minutes or insurance proof are scams. Piechota said emails from sba.gov addresses are credible, and people should respond.
Shuttered Venue grant program
Closed entertainment businesses may want to hold off applying until more information about the Shuttered Venue Operators Grant program is released because those who receive PPP loans may not be eligible for the grants, Piechota said.
He encouraged Long Islanders to look at SBA programs and connect with administration partners such as Small Business Development Centers, women's business centers or the Service Corps of Retired Executives, which may be aware of other government and private relief opportunities.
"There's something in there for you," Piechota said.