More than $1 million in loans has been distributed to only 19 local businesses in the wake of Superstorm Sandy, suggesting that few businesses are benefiting from the subsidized loan programs offered by the federal and city governments.
According to numbers provided to Sheepshead Bites by the federal Small Business Administration (SBA) and the New York City Small Business Services (SBS), as of late last week, $1,083,100 government subsidized loans went to business in zip codes 11229 and 11235, an area that includes Sheepshead Bay, Manhattan Beach, Gerritsen Beach, Marine Park, Brighton Beach and Plumb Beach – some of the areas hardest hit by Superstorm Sandy.
From the SBA, two loans were given out in 11229, totaling $311,400. Seven were approved in 11235, totaling $521,700.
From the SBS, 10 loans have been approved in Sheepshead Bay totaling $250,000.
SBS loans offered by the city max out at $25,000, but only carry a one percent interest rate and are to be repaid in two years. It’s meant to serve as a stop-gap measure to provide quick cash flow and allow local businesses to get up and running again.
Business owners who need more capital are then directed to the federal SBA, which carries higher interest rates – starting at four percent – but also dole out larger sums of cash and stretch out for as long as 30 years. Locally, the nine SBA loans average out to just over $119,000.
And while only nine SBA loans were given out locally, many more are still going through the application process, the SBA noted.
“So far we’ve issued more than 8,300 business applications in Kings County, but we’ve only received 480 back,” said Andre Ledgister, a public affairs specialist at SBA. ”Why is that? It can be a variety of reasons. Some people are still filling out applications because of loss of important documents, fear about loans, inaccessibility to documents, etc.”
While businesses aren’t benefiting as much as they could be from the loans, homeowners in the two zip codes seem to be doing better. Ledgister said 127 homeowners in 11229 and 11235 have obtained $5,443,600 in SBA loans.