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PPP Loans

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By Leah S. Dunaief

Leah Dunaief

A number of small local businesses applied for and received, in the course of the pandemic, money to pay their employees as their customers and revenues dwindled. Some $800 billion was made available by the federal government through the Paycheck Protection Program, or PPP as it was known for short, and overseen by the Small Business Administration. The actual lenders were banks, 5,200 of them, and they made a small percentage on what they loaned.

But according to an analysis in The New York Times, that was nothing compared to what two newcomers made as they rushed to the scene. These two companies pocketed more than $3 billion in fees, and they weren’t even lenders. It was all legal. Here’s how they did it.

Since the banks were getting a percentage of what they loaned, for each set of paperwork processed, they logically favored making larger loans for their efforts. These invariably went to larger companies. The result was that the smallest companies, asking for the smallest amounts of money, who were perhaps the ones most needing the help, were overlooked. Blueacorn was founded last year to help companies get PPPs. “Tiny businesses, self-employed individuals and minority communities are left out in the cold,” explained the CEO to The NYT.

The federal government realized this discrepancy and, last December, raised the fees for small loans, later encouraging even unprofitable solo businesses to ask for help. Both Blueacorn and the second company, Womply, which already existed but in a different niche, rushed to advertise their processing services with the PPP on behalf of these tiny businesses. Their ads were on New York City subways, billboards and Facebook, according to NYT reporters Stacy Cowley and Ella Koeze, offering “free money for those who qualify.” During that time, from late February to May 31, the companies processed 2.3 million loans, with most less than $17,000, and then turned them over to banks. 

Those interested banks, now promised by the government 50% of loans valued at less than $50,000, with fees up to a maximum of $2,500, could find making small-dollar loans more profitable. At least that was the intent of Congress in December of last year when it made the change.

For Blueacorn, in Scottsdale, Arizona, and Womply, in San Francisco, finding the banks, putting them together with the borrowers and doing their paperwork in a standardized way, proved more profitable than for each of the banks to do the work themselves on behalf of the smallest businesses. Now all the lenders had to do was pass the paperwork to the government and fund the loans.

Largely as a result of these two companies, lenders made 5.8 million loans this year as opposed to 3.6 million in 2020. The average loan size dropped from over $100,000 dollars last year to $41,560 in 2021. The six most active lenders this year partnered with one or both of those companies. 

Blueacorn worked with just two lenders: Prestamos CDFI, a non-profit, and Capital Plus Financial. Just for contrast, Prestamos made 935 PPP loans last year, totaling $27 million and 494,415 loans for $7.7 billion in 2021, according to The NYT, until applications halted.

Womply used 17 lenders and processed 1.4 million loans, totaling more than $20 billion dollars, some 7% of PPP money loaned this year.

Here is the payoff for the two companies. Because Congress wanted to make smaller loans more lucrative, Prestamos made $1.3 million for its lending last year and $1.2 billion this year, but will keep “only a fraction of its earnings.” Blueacorn, because if its agreement with Prestamos, will get a “significant” portion of the $1.2 billion Prestamos is collecting. Capital One Financial, a public company and thus more transparent, earned $464 million in fees for its PPP loans during the quarter but only kept about a third or $150 million.

So Blueacorn gets some $1 billion this year and Womply anywhere from $1.7 billion to $3 billion. That dwarfs any other PPP loans or fees. Thank You, Uncle Sam! 

Photo from Jim Lennon

By Daniel Dunaief

Kevin O’Connor, CEO of BNB Bank, is focused on the bread and butter businesses of his bank and of the communities he serves: small businesses.

O’Connor ensured that BNB,  with its Bridgehampton National Bank branches, dove headfirst into the first Paycheck Protection Program, or PPP, from the federal government in the first round, lending over $1 billion to more than 4,000 businesses. That is in addition to the $400 million Dime Bancorp, which plans to merge with BNB later this year, loaned to small businesses.

In the second round, O’Connor expects about 30 to 40% of the businesses that received loans in the first round will apply for additional funding.

In addition, O’Connor expects that customers who are seeking a second round of PPP will likely return to the bank they used in the first round, in part because businesses will be applying for a second draw on a loan, rather than for a new loan.

“We’re hoping that makes the paperwork easier,” he said.

So far, about 10% of the businesses that borrowed through the PPP have asked for forgiveness on their loan. Most of the businesses that sought forgiveness received it, especially if they used it for the anticipated purposes.

O’Connor is eager to see these small businesses, whom he lauded for their contributions to the areas they serve, survive the ongoing hardship created by the COVID-19 pandemic.

At the same time that a vaccine offers hope, these small businesses remain in perilous condition, as the percentage of positive tests continues to climb and hospitals handle an increase in patients.

Small businesses “don’t have a unified voice,” said O’Connor. The BNB chief executive called these small businesses the “lifeblood” of the communities.

The PPP program presents an opportunity for BNB to provide funding to a range of customers.

The success of the program led non-customers who were friends of customers to seek out financial support for their struggling businesses from BNB.

O’Connor said BNB hopes to expand their interactions with these new customers into full-service relationships, providing a range of other banking products.

No Red Microphones

O’Connor said BNB has focused in recent years on enhancing the product knowledge from their employees.

“We trained our people better on our technology so they can better explain it,” O’Connor said. “Branch managers weren’t using the mobile app. How can they sell it if they weren’t using it themselves?”

While the technology hasn’t changed, it has become better for customers because bankers can explain it better.

During the pandemic, O’Connor has made numerous efforts to reach out to bank employees, hosting conference calls and zoom calls. O’Connor urged bank employees to keep their cameras on during those calls. In smaller meetings, he also asked his coworkers to unmute their phones, to enable an open dialog among the staff.

“If I see red microphones, I ask [that employees] turn them on. We’re talking here. This is a conversation,” he said.


While he led the bank during the pandemic, O’Connor also experienced COVID firsthand, when he contracted the virus. He said his children were worried about him, but that his case was “pretty mild.”

The virus “makes you recognize that we’re a part of something bigger, whether we’re talking about PPP or worry about trying to keep the lights on in your building,” he said.

While some people are receiving the vaccine, O’Connor said he wasn’t comfortable requiring everyone to receive shots.

“I’d be hard-pressed to do that,” he said. When it is his turn to get a shot, O’Connor said he would take the vaccine.

While the vaccine has given him reason for optimism, he said the bank has been cautious in the last few weeks with its staff.

“We’ve sent a lot of our employees home,” O’Connor said. “We’re back to a skeleton crew in Hauppauge. We’re monitoring our branches” amid an uptick in cases.

O’Connor and other bank executives are looking at the total number of branches the bank may need in the future. The company has continued to generate business in its branches, although some are “busier than others. We’re going to continue to look at that.”

The Chief Executive described branches as “outposts” in the community, and believed that the branch decisions would be an “evolutionary process.” 

O’Connor said the virus may lead employees to a better awareness of the needs of their coworkers.

“You may come to work every day, but another man or woman isn’t there. They may have an underlying health issue and don’t want to talk about it. You’d like to think it’s making better people of us. At some point, people who can, should do and people who can’t, let’s take care of them,” O’Connor said.


O’Connor said the combination with Dime is a true merger of equals. The top executives from the two banks represent a 50/50 split with Dime.

“I feel comfortable that the culture will come together,” O’Connor said. “We will be a unique bank. There’s nothing like this. It’s truly Long Island-based.”

O’Connor said the bankers at both institutions have a “passion for what we do.”

And he respects entrepreneurs and small business owners, many of whom have pivoted to other products or modes of delivery for their products.

“So many [small business owners] have made so many sacrifices,” he said.

Stock photo

Local businesses will now have more time to apply for Paycheck Protection Program loans as the aforementioned program has been extended until Aug. 8. 

President Donald Trump (R) signed a bill into law July 4 that ensures the loan program’s  application deadline will run for another five weeks. The bill’s passage allows the U.S. Small Business Administration to resume approving PPP applications, as the agency previously stopped processing forms on June 30. At that date, the SBA had approved nearly 4.9 loans with total funds over $520 billion.

In New York state, close to 324,000 PPP loans had been made, totaling $38.3 billion, according to SBA data. Despite that, the SBA had approximately $130 billion in unallocated funds when it momentarily shut down.

“The surprise for us and a lot of regional bankers is that there is still so much money that remains in the program,” said Bernie Ryba, regional director of the Small Business Development Center at Stony Brook University. “We had seen a huge surge of applications coming in before, but it has stayed flat the past few weeks. It’s been a complete reserve.”

Due to the changes the administration made to the program back in June, businesses that are seeking to qualify for loan forgiveness now have 24 weeks instead of the previous eight weeks to spend PPP funds. The portion of the loan that must be spent on payroll has been reduced from 75 to 60 percent. Businesses won’t be penalized if employees who have been offered their jobs, including same pay and hours, don’t return. 

The SBDC regional director said, with the updated terms, businesses who didn’t choose to apply initially could now decide to do so now.  

“The terms are better, that’s a real positive,” he said. “Some of the companies we’ve been working with said they felt constrained during the original eight-week period. It is a welcomed change.”

Ryba said in some cases he has heard of local and regional banks reaching out to businesses who still haven’t applied for the program. 

“It’s puzzling to them, like, ‘Why aren’t more of these businesses taking advantage of these terms?’” he said. 

The federal program loans up to $10 million with an interest rate of 1 percent and a five-year term. Ryba expects to see a mini-surge in application submissions as the Aug. 8 deadline gets closer. 

“There are some businesses who might think they can skate through this and don’t need to apply,” he said. “As the deadline looms they might change their minds.” 

In addition to Trump’s extension this past holiday weekend, a group of U.S. senators from the Senate Banking Committee tabled a bill that gives automatic forgiveness to businesses. 

Sens. Bob Menendez (D-New Jersey), Kevin Cramer (R-North Dakota), Thom Tillis (R-North Carolina) and Kyrsten Sinema (D-Arizona), introduced the Paycheck Protection Small Business Forgiveness Act, which would forgive PPP loans of $150,000 or less if the borrower submits a one-page attestation form to their lender.

According to the group, approximately 85 percent of PPP loans would be eligible for this simplified loan forgiveness process. The cost of applying for forgiveness for a PPP loan of this size is $2,000 for the small business and $500 for the lender. The senators say the bipartisan legislation could save small businesses $7.4 billion and banks nearly $2 billion.

With the updated terms, the application to have PPP loan forgiveness has been simplified. Ryba said the application requires fewer calculations and documentation. It has helped quell some of the concerns owners have had. Small businesses have until Dec. 31 to file their forgiveness applications. 

“The process has been simplified, but there still continues to be a lack of clarity of how to treat certain expenses,” he said. “We hope that gets cleared up, we are trying to stay informed as possible and give our clients the best guidance.”

Photo by Kyle Barr

Small businesses are the Atlas of the economy. Too often attention is paid to the huge corporations, whose employment numbers are cited for why they need stimulus in times of crisis. However, when money circulates at the ground level, it tracks among the small businesses, our friends, our neighbors. 

That’s why it’s so disheartening to see a program meant to support those same small businesses first be shuttled through banks who simply weren’t prepared for it, then being abused by large companies it wasn’t made for, and now is seeing constant changes which may make using the loan a kind of poisoned chalice, one that looks appetizing but may just be a death blow to any who drinks from it.

The fact the Payment Protection Program was shunted through banks in the first place was a misstep. Many small business owners complained clients of the banks were given preference (and even among those, larger companies were prioritized). Smaller-sized banks themselves found they had to establish a whole new infrastructure for handling and dealing out these loans.

And then, companies with many more employees nationwide than the requisite 500 or under had received such loans because of loopholes in the lending requirements. Approximately 94 loans were made to publicly traded companies, totaling around $365 million. Reuters reported that well over 70 of these companies which received aid had months of emergency cash on hand to get them over the hump. The loans of up to $10 million were designed to tide over small businesses for eight weeks, rehiring staff in the process. 

A program that started with $349 billion has grown to $669 billion after thousands were left high and dry after the first round of loans. This program that was meant to support small businesses has contorted into a mess of paperwork that has many concerned it will saddle them with debt long term.

Some owners find they have no reason to take on their furloughed labor if none of them wish to return to work anyway. With many fearing the economic impact could last much longer than eight weeks, even more are concerned they may have to lay off employees once again just a short time after spending the funds.

Some businesses have reported anxiety at using the funds at all, fearing that they will somehow make themselves ineligible for the loan turning into a grant. Many businesses rely on independent contractors, but according to loan rules, none of the money received can be used for contract labor.

Politico wrote May 8 that the watchdog agency of the Small Business Administration (the SBA administers the PPP loans) reported the federal agency has strayed away from the original language of the law in creating new restrictions. PPP requires businesses to spend 75 percent of the loan on payroll to get forgiveness and that the balance must be paid back in two years. Both of these bylaws were absent from the original bill.

But questions still weigh heavily on the minds of business owners. Everything most people understand about the loans can still change. 

All this goes to show PPP was unleashed too hastily and clarifications have been much too slow to roll out. Small business owners need specifics and they need guarantees. Guidelines need to be strict enough to avoid scams while keeping in mind the reality of modern day small businesses. 

U.S. Sen. Chuck Schumer (D) has already called for easing restrictions. Our other local federal representatives must hear owners’ concerns, and then relay those fears to the U.S. Treasury Department and SBA.

These small businesses need that help, because if we lose them, some of the best parts of our communities go with them.

U.S. Sen. Chuck Schumer said there is need to increase the PPP loan funding, but he and Republicans have disagreed how. File photo by Kevin Redding

The federal Small Business Administration announced the government’s Payment Protection Program, which initially put up $349 billion in funds for small businesses across the country, has run out of funding in just eight days since it came online.

Thousands of loans are still being processed, and both government and small business owners are calling for more funds to be added to the bill, which was meant to stimulate small businesses and help keep more from filing for unemployment.

Around 41,000 loans have been approved for New York State out of 1.7 million. However, many businesses were left short of approval or didn’t manage to file in time. Others, who filed early as possible, found their early attempts confused with both misinformation and lack of clarity from banks and federal agencies.

Bernie Ryba, the regional director of the Stony Brook Small Business Development Center , said during a live stream with the Rocky Point Sound Beach Chamber of Commerce April 16 there are growing signs of the economy deteriorating “faster than anticipated,” and the $2.2 trillion CARES Act, passed at the end of March, may not be enough.

He added banks have already been ordered to not accept any more applications.

“It demonstrates the extent of the damage small businesses have experienced over the past three weeks,” he said. 

Ryba said the SBA was not staffed to handle the number of applications. From acceptance of application to approval was going to be 30 days, but he said that number has gone out the window due to the incredible number of applications.

Some have also criticized who have been able to apply for loans, and how quickly they received it. Politico reported that a number of large chain restaurants ate up millions of dollars in loans meant for small businesses. Such chains as the companies behind Potbelly Sandwich Shop and Ruth’s Chris Steak House, each received $20 million and $10 million in loans respectively. While the loans were meant for companies with 500 or less employees, this rule was expanded to allow companies to apply as long as they didn’t have more than 500 employees in a single location.

While both Republicans and Democrats agree more funds need to be added, the parties are bickering back and forth about how much. The GOP has proposed an additional $250 billion to the PPP program, but Dems stymied that, arguing the bill, which U.S. Sen. Chuck Schumer (D) called CARE 3.5, should also include $100 billion for hospitals, $150 billion for state and local governments and a boost to food assistance. Republicans have blocked that effort in return.

Schumer, the senate minority leader, said in a live streamed conference with Long Island Association President and CEO Kevin Law April 17 that there could be two additional COVID-related bills in the near future.

Meanwhile, Ryba said his small business center, which also has offices in SUNY Farmingdale, will be receiving around $1.1 million in federal assistance so they can hire additional staff in order to handle a larger number of business owners looking for advice.

Law said the thing of biggest importance isn’t the long term of the whole U.S. economy, but making sure that these small businesses and average people have money in their pockets to deal with the short term. He also questioned whether the government may allow some different types of nonprofits to apply for aid through PPP, as currently only 501c3’s are applicable. Schumer said they would look into allowing 501c6’s and others to also apply for any further aid in the future.

Schumer agreed, saying the government’s focus should be twofold, adding the government needs to approve the PPP extension “so their money gets out there faster, it is job number one. Testing — if we don’t get it done we’re not going to recover. Those are the two biggest things.”

More from Schumer and Law’s Conversation

People are facing multiple hurdles during the ongoing coronavirus crisis, but Law said those people need help from the federal government.

With people’s $1,200 checks for people making under $75,000 a year finally going out, Schumer said that should not be the end of such funds to everyday Americans. He added he thought the wage limit should be raised to people making around $99,000 a year.

“If you have a wife who is a hospital worker, you’re making more than [the $75K] but you still need help,” he said.

In terms of mortgages, Law said while there was something being done for those with federally backed mortgages, he asked if there was anything being done for those with more locally or commercially backed mortgages.

“We need some kind of commercial forbearance for both commercial and tenants,” Schumer said. “I pushed for this in CARE 3.” (The bill called the CARES Act passed March 30.)

The LIRR is currently asking for an additional bailout, with ridership now down by 97 percent, but services are continuing for essential workers, especially those working in health care. Schumer said he wants to provide more assistance to both the LIRR and to the Suffolk and Nassau bus systems.

For other municipalities, he said bills he called CARE 4 and 5, the first of which he expected to come up in the first few weeks of May, will also include more money for townships who have also experienced revenue shortfalls from the coronavirus.

Law also suggested the federal government look into creating some kind of public works program in the vein of President Franklin Roosevelt’s post-Great Depression programs in the 1930s and 40s, specifically for public and infrastructure works such as roads, bridges and sewers. Schumer agreed with the idea for when things finally start to open up.

“We’re going to have to stimulate the economy, and the best way to do that is through infrastructure,” the senator said.


All businesses with under 500 employees can apply for the federal loan to rehire employees, but some have experienced issues. Stock photo

Businesses are looking for sanctuary during the absolute tumult caused by the ongoing coronavirus pandemic. However, some say even with the federal government’s attempt to help keep employees on payroll and businesses running, some question when their submissions will be processed, while others question how much it would help.

The $349 billion Paycheck Protection Program, which passed congress in March as part of the $2 trillion CARES Act relief bill, was made to offer businesses with 500 employees or less loans up to $10 million specifically to keep on or rehire employees. This is partly to keep those shops afloat while revenues have plummeted and to keep people from being forced to go on unemployment. New York’s unemployment system, in particular, has been overwhelmed, with over 600,000 claims processes and another 200,000 still in partial status. Many people report having to call the unemployment offices dozens or even 100s of times and not getting a response. 

“How can you expect us to bring employees back full force if you’re not allowing us to open the doors?”

— James Luciano

But as Gov. Andrew Cuomo (D) and other states are starting to meet to discuss a timeline for bringing everything back online, businesses still await the loans that will essentially enable them to rehire those employees. 

For others, the loans may be too late. Bernie Ryba, the director of the Stony Brook Small Business Development Center, said by the center’s estimates there could be as many as 25 percent of restaurants across the country saying they have likely closed permanently. Another 25 percent, he said, could be also looking at shutting their doors.

“If you have, in the restaurant industry, 12 million that are employed, you’re looking at 6 million that will never go back to work,” he said.

That’s why applying for the PPP loans early is so important, not to mention that the money could eventually run out, though congress is in talks of supplementing the program with additional funds.

The PPP loans of up to $10 million would normally have to be paid off with a 1 percent interest rate over two years, but if 75 percent of funds are used for payroll, keeping staff to pre-pandemic levels for eight weeks after the loan is disbursed, then the loans will be forgiven.

Ryba said it is incredibly important for businesses to apply as soon as possible, adding there have been some businesses who reported to him receiving funds already. However, for businesses who have applied and haven’t heard anything back about their applications, some owners are left with a bad taste in their mouths.

Several have complained the rules of the loan were not well explained, and the timeline for when money can and will be disbursed is hanging in the air, all the while business owners can only sit around in the anxiety of not knowing.

Roger Rutherford, the general manager of Roger’s Frigate in Port Jeff and the president of the PJ Business Improvement District, related it to the disaster loans after Hurricane Sandy in 2012, when he said it took him two years and multiple meetings before he ever saw a dime from the federal government. Though he said the timeline for these loans should be much shorter than that disaster, he said his daily calls have not yet resulted in word on the loan.

James Luciano, the owner of the Port Jeff Lobster House and BID secretary, said he, along with most business owners he knows, have applied for the PPP loan. However, he said it could be weeks before he even hears his application was processed, and the guidelines were not clear on what he would get or have to repay. 

“They’re keeping up this thing to bring employees back, but how can you expect us to bring employees back full force if you’re not allowing us to open the doors?” he said.

The government has clarified that employees would have to be rehired to levels as of Feb. 15 by June 30.

Such need for clarifications has been constant from the federal government. Problems with the program started on day one, according to the Wall Street Journal which wrote that the nation’s largest banks were unable to take loan applications when it launched April 3 because the government did not send them application documentation until the previous night. Ryba said the institution of the program “took lenders by surprise,” with many having only one week to prepare top accept applicants. 

Some businesses have also had issues applying for the loan, especially if they were affiliated with smaller community banks that are not certified with the federal Small Business Administration as an approved lender. Other larger regional and national banks, Ryba said, have focused more on their own customers who do business with them, not even those who may only use the bank to deposit.

“This is very different from 2008 — now you see banks and borrowers working together.”

— Charlie Lefkowitz

In such cases, applying for the loan requires different documentation.

The PPP is just one of several loan systems businesses have been applying to in this time of crisis. The Economic Injury Disaster Loan Emergency Advance is supposed to loan businesses up to $10,000 in economic relief. The loan wouldn’t have to be repaid, though. Nationally, businesses have told outlets like The New York Times that such funding has all but dried up.

Luciano said he has received an email saying his PPP loan was approved and to expect paperwork in the next five business days. However, he added he has heard nothing about his disaster loan application, and his accountant told him he “did not expect anyone to see that money.”

In a conference call with businesses March 26, before the final bill was signed, U.S. Rep. Lee Zeldin (R-NY1) held a conference call with local businesses along with the Long Island branch manager of the Small Business Administration Robert Piechota. Piechota said at the time while the bill had yet to be signed, in normal times such loans would take around 21 days for the application to be processed, and another five for the money to be released. 

“In good times you’re looking at a month,” he said.

Jennifer Dzvonar, the owner of Bass Electric in Port Jefferson Station and president of the Port Jefferson Station/Terryville Chamber of Commerce, said there is much misinformation out there on the internet, and the best choice for anyone looking to get the loan is to go to the SBA website.

Despite not yet hearing of a single business that has yet received any funds from the loans, Charlie Lefkowitz, the president of the Three Village Chamber of Commerce, said there has been a general effort on all levels, whether its regional government down to the community level, to help these businesses in their time of need.

“This is very different from 2008 — now you see banks and borrowers working together,” he said. “This is unprecedented, and across our community … you’re seeing cooperation on all levels.”