Three weeks after its launch, a $75 million city loan fund for small businesses is so overwhelmed with applications that it will pause the program, the Department of Small Business Services said this week.
The NYC Small Business Opportunity Fund—billed as the “largest ever” public-private fund partnering with Goldman Sachs, Mastercard Center for Inclusive Growth and the Community Reinvestment Fund—expected to serve 1,500 businesses with loans up to $250,000 at a below-market interest rate of 4%.
But more than 10,500 small businesses applied, forcing the program to “pause,” officials said Monday.
“As we pause intake of applications, our partners are working as quickly as possible to process those in the pipeline and disburse funds to eligible small businesses,” SBS Commissioner Kevin D. Kim said in a statement.
Several businesses that applied have already received their money, said SBS representative Josh Jamieson, who declined to give a specific number. He said all of the previously announced partners are still part of the program—including Goldman Sachs, which contributed $50 million toward the fund.
The full $75 million will be awarded, Jamieson said, although the agency would not provide a specific deadline.
“What this is showing us is this huge demand for capital,” said Yanki Tschering, executive director of Accompany Capital, one of the nonprofit financial institutions tasked with helping business owners with their loan applications. “During the pandemic, reserves that small-business owners had were depleted. PPP [the Paycheck Protection Program] was helpful, but it just covered, I think, literally two and a half months of payroll.”
Tshering said that within minutes of the program’s launch on Jan. 23, applications came rolling in.
“We came back to our desks after it was announced, and literally, we had 500 applications in the pipeline,” she said. Members of the lending team began combing through the paperwork, sorting the requests into different buckets and evaluating which businesses met the qualifications for the loan. “There’s a huge need, and maybe some are seeing new opportunities.”
Accompany Capital primarily works with immigrant and refugee business owners. So far, Tshering estimates that 10 small businesses are in the approval process and a additional 50 are likely to be approved.
“Whatever we approve, as long as the funds are there, will be approved by the Opportunity Fund,” she said.
The fund offered loans between $2,000 and $250,000, aimed at giving a boost to small businesses that were hit hard by the pandemic. Officials described it last month as the city’s largest public-private loan fund aimed at small businesses.
“They were asking for help. They were asking for a lifeline, but we heard them,” Mayor Eric Adams said on Jan. 23, when the fund was announced.
More than 4,000 businesses closed between 2019 and 2021, according to a city comptroller’s report.
Source: crainsnewyork.com
