Smallest firms get special 2-week application window to apply for PPP loans
Elizabeth Wellington, co-founder of the Elmont firm Wellie the Transporter, with her husband, Antonio, and son, Stephen; the company does not plan to seek a second PPP loan. Credit: Newsday/J. Conrad Williams Jr.
The smallest businesses will have an exclusive two-week window, starting on Wednesday, to apply for COVID-19 relief loans, President Joe Biden announced Monday.
During the 14-day period, banks and other private lenders will work only on applications for Paycheck Protection Program loans from borrowers with fewer than 20 employees. Such businesses account for more than 90% of all private-sector employers on Long Island and across the country, according to recent census data.
PPP loans come with an interest rate of 1% and a five-year term. First-time borrowers may receive up to $10 million and second-time borrowers, up to $2 million. The federally guaranteed loans are forgivable if the terms are met. Newsday received a $10 million loan in April.
Borrowers face a March 31 deadline to apply for PPP funding. More information is available at sba.gov/ppp.
Besides the new application window, Biden said on Monday the mathematical calculation used by lenders to determine the size of PPP loans will be revised so enough funds reach businesses with no employees, independent contractors and the self-employed. They have received loans as small as $1 in the past, he said.
"These changes will bring much-needed, long overdue help to small businesses who really need help staying open, maintaining jobs and making ends meet," Biden said at a Washington event. "Getting our economy back means bringing our small businesses back."
He criticized the first round of PPP loans, made between April 3 and Aug. 8, saying "a lot of these mom-and-pop businesses got muscled out of the way by bigger companies who jumped in front of the line."
In the second round of PPP, which started last month, the share of loan funds going to businesses with fewer than 10 employees is up nearly 60% and to minority- and women-owned businesses, up more than 40%, according to the U.S. Small Business Administration, which oversees the program.
In December, Congress and then-President Donald Trump authorized more than $284 billion in loan guarantees for PPP 2.0 and $133.5 billion had been used as of last Thursday, SBA data show.
On Long Island, advocates for small businesses said Biden’s PPP changes are beneficial, though they said the exclusive application window needs to be longer than two weeks.
"This will certainly benefit small businesses on Long Island. … But there needs to be a major push to get the word out, so people don’t miss the window," said Eric Alexander, who has lobbied for more equitable PPP funding as founder of the LI Main Street Alliance, which represents 45 downtowns that are undergoing revitalization.
He said small business owners often lack the financial records needed to apply for a loan. Some don’t have an accountant and report their business’ income on their personal income tax return.
"Some are total cash businesses, others don’t have their paperwork in order" to apply for a PPP loan, Alexander said.
Biden’s announcement came amid criticism that lenders are bypassing the smallest businesses and minority and women entrepreneurs. His changes follow last month’s four-day exclusive application processing window by the U.S. Small Business Administration for minority and women borrowers and a similar window for lenders with assets of $1 billion or less.
Biden’s PPP changes also remove barriers to participation for borrowers who are legal residents but not U.S. citizens, have a recent non-fraud felony conviction or are late in repaying their student loans.
"It’s good that [Biden] wants to reach out to minority businesses because they are hurting," said Elizabeth Wellington, vice president and co-founder of Wellie the Transporter LLC, a small trucking company in Elmont. "But the bigger companies need help, too, otherwise they will be forced to lay off employees — and that will hurt the U.S. economy."
She said she doesn’t plan to seek a second PPP loan. She used the first loan to purchase a 53-foot container, which her family's four-person business needed to win delivery contracts.
The PPP "should treat everyone equally across the board," said Wellington, who also is an officer in the Long Island African American Chamber of Commerce.
PPP CHANGES
President Joe Biden on Monday announced changes to the Paycheck Protection Program that he said will help the smallest of small businesses.
- Establish a two-week window, starting on Wednesday, in which only borrowers with fewer than 20 employees can apply for PPP loans.
- Boost loan amounts for sole proprietors, independent contractors and self-employed people.
- Ease restrictions on applications from borrowers who are legal residents but not U.S. citizens, have a recent non-fraud felony conviction or are late in repaying their student loans.
SOURCES: The White House, U.S. Small Business Administration
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
'I'm going to try to avoid it' A trip to the emergency room in a Long Island hospital now averages nearly 4 hours, data shows. NewsdayTV's Virginia Huie reports.
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