NEW YORK—There is help on the way for the city’s small businesses as they try to slug through this economic depression—and it’s little bit like ‘Mayor Bloomberg to the rescue’. Many small businesses need to borrow money—either to stay afloat or to make improvements—and they are finding the banks less than willing to take a chance on them.
On Thursday (May 14) Mayor Bloomberg and New York City Council speaker Christine Quinn announced the first round of twenty-eight small and micro businesses to receive loans through the recently expanded NYC Capital Access Revolving Loan Guarantee Program.
The program is for small and micro businesses that cannot access traditional bank loans, and the money can be used to purchase inventory, equipment, insurance, or to pay salaries and expenses.
“With many small businesses finding it hard to get the bank loans they need to run their businesses and pay their employees, we've taken steps to help those that have been turned away, often for reasons beyond their control. Together with the private sector lenders we've partnered with, our NYC Capital Access Revolving Loan Guarantee Program is helping businesses in all five boroughs weather these tough times and avoid having to lay off employees or shut down altogether," said Bloomberg.
For the 28 businesses in the first round the City guaranteed an estimated $940,000 in loans. The businesses come from all five boroughs, and include a garment manufacturer, an ice cream shop, and a hairstylist—to name a few. Each business received a loan for anywhere from $1,500 to $250,000.
For some of the business owners receiving the loans, this program is the thing that saved them from going under.
“Right now, this loan will definitely help me, as we are short on rent and other expenses. Thanks to the City's loan program and the Brooklyn Coop, our business is still alive and hopefully this season it will get busy again and we will make it through this difficult period,” said Luis Guevera, owner of Q Sweaters Inc.
In October 2008, Mayor Bloomberg and Speaker Quinn announced the City was expanding the NYC Capital Access Revolving Loan Guarantee Program as one of 18 initiatives to help New York City businesses and residents face current economic challenges.
The expansion enabled the City offer loans to small businesses and nonprofits, in addition to the micro businesses already covered by the program, to help them meet payrolls or other pressing expenses. The City is dedicating $5 million to the program, which guarantees up to 40 percent of eligible loans from participating lenders to small businesses with up to 100 employees. Businesses with fewer than 100 employees account for nearly 50 percent of the City's workforce.
Loan proceeds may be used for working capital, leasehold improvements, and equipment purchases. The initial cycle of $5 million in guarantees will generate an estimated $13 million in loans and help roughly 400 businesses and more than 700 employees. The program was developed by New York City Economic Development Corporation in cooperation with the City's Department of Small Business Services.