Part of the federal government’s response to the COVID-19 pandemic was a plan to aid businesses that were forced to shut down by providing loans that helped pay employees. This initiative, the Paycheck Protection Program, was part of the CARES Act and administered by the U.S. Small Business Administration.
The second round of loan payments began on April 27, and quickly surpassed the first round of applications. As of Thursday, over $500 billion in loans was distributed.
“The Paycheck Protection Program is providing critical support to millions of small businesses and tens of millions of hardworking Americans,” said SBA administrator Jovita Carranza and U.S. Treasury secretary Steven Mnuchin in a joint statement earlier this month. “We are fully committed to ensuring that American workers and small businesses continue to get the resources they need to get through this challenging time.”
Local businesses in Patchogue have taken advantage of the program, which grants funds to businesses affected by the pandemic. According to the SBA, the goal of the program is to keep workers on the payroll.
Bridgehampton National Bank assisted some of the first recipients of the grant in earning their funds, helping over 3,800 businesses on Long Island and in New York City secure over $950 million.
“We immediately mobilized over 100 employees, representing every part of the bank, to review, process, and manually input applications into the SBA’s loan portal,” said BNB president and CEO Kevin O’Connor in a statement. “Our size gave us the advantage of being able to modify our processes in real-time as SBA guidelines evolved. It also allowed us to focus our efforts on processing PPP loans, literally 24/7, right up until funds ran out. This has also been a unique opportunity for our employees to make a difference and be part of something that is helping the community.”
O’Connor added that about 80 percent of the loans were for $350,000 or less and most of the funds were going to neighborhood businesses. He estimates that BNB helped save 95,000 jobs across Long Island.
Jeff Berg, owner of Record Stop on Railroad Avenue in Patchogue, said he was lucky to work with the bank and get one of the early loans offered.
“If it wasn’t for that, I wouldn’t be able to have my main staff,” Berg said.
Online sales have helped to keep business stable for Berg, but the trick will be getting the loan forgiven. According to the SBA, there are several ways to be compliant in an effort to make the process easier. But businesses currently have until June 30 to get employees rehired, and Berg said he will need to adhere to the concern of being closed as well as the safety of employees.
James Bonano, owner of the Tap Room, said the deadline is tough to get loan forgiveness, as workers are less needed due to a decrease in demand with in-house dining prohibited.
“The low business demand means I need less employees and I need less payroll,” Bonano said.
Another challenge moving forward will be to repay the loan. The SBA is giving a two-year maturity date, with a 1 per- cent interest rate, and a deferment of six months. Bonano said it will be tough to be able to bounce back and make enough money in six months to make up for lost business and then a loan on top of that.
“It’s hard enough to be profitable in a restaurant with 100 percent of diners coming in,” he said.
Bonano is advocating for a longer term to pay back the loan. But the grant was still a help to his business.
“I’m grateful that the government enacted this,” he said. “Without it, I’d be losing a considerable amount of money.”