New York City Didn't Get Fair Share of PPP Loans, Comptroller Report Says
July 15 2020 - 2:51PM
Dow Jones News
By Akane Otani
New York City small businesses got disproportionately fewer
loans from the federal government's Paycheck Protection Program
than parts of the country that weren't as hard hit by the
coronavirus pandemic, a city comptroller report says.
Only 12% of the roughly 1.1 million employee-based and
nonemployer businesses in New York City received a PPP loan,
according to the report set to be released Wednesday. By
comparison, more than 20% of businesses in states that were less
economically affected by the pandemic -- like North Dakota, South
Dakota and Nebraska -- got federal aid, the report says, based on
roughly three months of federal data on the program through June
30.
Small businesses in Montana, Kansas, Iowa and Wyoming also
received a higher share of PPP loans than businesses in New York
City, the report says.
"New York City is the economic engine of the nation, and PPP
loans should be a lifeline to our businesses that have been ravaged
by the Covid-19 pandemic," Comptroller Scott Stringer said in a
statement.
The $670 billion emergency relief program, which sped through
Congress with bipartisan support and began accepting applications
on April 3, helped save tens of millions of jobs from elimination,
economists say. But the program -- which has also benefited larger,
well-heeled and politically connected organizations -- has faced
accusations that it failed to aid many of the nation's smallest and
most vulnerable businesses.
The Small Business Administration, which runs the PPP, didn't
immediately respond to a request for comment on Mr. Stringer's
report. The agency has said the data it has released show the
program's success in helping a range of businesses.
"The PPP is an indisputable success for small businesses,
especially to the communities in which these employers serve as the
main job creators, " SBA Administrator Jovita Carranza said earlier
this month.
The comptroller's report found PPP funding disparities among the
city's five boroughs. In the hard-hit Bronx, 40% of small
businesses were granted PPP loans, below the citywide average of
50% and the lowest share of the five boroughs. The comptroller's
report also showed disparities across sectors, with just 22% of
nursing homes and mental health facilities receiving PPP loans,
compared with 66% of management consulting firms and 55% of legal
services firms.
When the program first launched, businesses were required to
spend 75% of their loans on payroll within an eight-week period to
have them forgiven. That made it difficult, if not impossible, for
many businesses that shut down during the pandemic to take
advantage of the program.
The challenge was heightened for businesses in New York, which
was hard hit early on in the pandemic and one of the first
jurisdictions in the country to order shutdowns affecting broad
swaths of its economy.
Congress has heeded calls to amend the PPP. President Trump
signed a bill in June that extended the period businesses had to
spend their loans and lowered requirements on payroll spending.
Earlier this month, the president also signed a bill to extend the
deadline for businesses to apply for loans to August.
Mr. Stringer said Washington must do more.
"Our analysis proves New York City's workers and entrepreneurs
have been shortchanged," he said. "The federal government must step
up to the plate and help New Yorkers get back on their feet."
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
July 15, 2020 14:36 ET (18:36 GMT)
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