By Brian Pascus, Crain’s New York
“We have to provide some relief for the businesses that are hurting right now,” Mayor Bill de Blasio said during a news conference Sunday. “So, we have two forms of relief we’re going to implement right away.”
The administration announced that businesses with fewer than 100 employees could be eligible for an interest-free loan up to $75,000 as long as they can document a 25% loss in customer receipts because of the coronavirus.
In a conversation with Crain’s, Commissioner Gregg Bishop of the Department of Small Business Services said the loan is intended for businesses in the service industry, such as restaurants and caterers, that have kept employees on payroll and seen a decline in revenues. It will be a 0% loan with a repayment term of 15 to 20 years, he said.
“We want to give them the maximum amount of capital, with zero interest, on the lowest amount of payments we can provide,” Bishop told Crain’s. “We want to provide temporarily relief.”
Brian Heller, a partner at Schwartz, Perry & Heller, said more details were needed to evaluate the loan program. “You can have a small business of 10 people and it could be a bodega in Brooklyn, or it could be a hedge fund. It certainly seems like there should be some sort of evaluation to determine what is necessary.”
Even though the loan can be as much as $75,000, Bishop said, he doesn’t expect to see any businesses request the full amount. He said the loan program would be financed by a loan-loss reserve underwritten by private financial institutions and guaranteed by the administration.
In addition to the loan program, the administration announced that businesses with fewer than five employees can apply for cash grants if they can prove similar revenue losses tied to the virus.
“We will be able to get money in their hands to tide them over,” de Blasio said during his news conference. “The details of that initiative we’ll put out. This is something we’ve just got approved.”
The mayor called the grant program “a literal, a direct cash grant to very small stores that are at a point where they may have to lay someone off,” and suggested that small businesses with fewer than five employees call 3-1-1 to learn more about receiving the assistance.
Bishop told Crain’s the grant is reimbursable and set to cover up to 40% of payroll costs for the months related to revenue decline, which the administration anticipates will average $6,000 per business. Bishop said the grant would be paid for by a tax levy similar to other grant programs on the administration’s balance sheet.
It is not clear yet how the de Blasio administration anticipates enrolling businesses in the two plans. When asked for details, the NYC Business Solutions Center, which is part of the Department of Small Business Services, directed Crain’s to a “Covid-19 Business Assistance Survey”.
The survey requests basic contact information and asks for an employee head count. There is a section that requests a description of revenue decline and business loss from Covid-19. Otherwise, there is nothing else in the survey that articulates the guidelines and payment structure for businesses applying for these programs.
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