NEW YORK (CBSNewYork) — The Small Business Administration says a key piece of the federal government’s stimulus efforts to help small businesses has run out of money as thousands of loan applications are still pending.
Typically this time of year, John Owens would be getting ready for Mother’s Day at O’Loughlin’s Florist.
“I don’t want my flower shop to be put out of business by something that I had no control over,” Owens told CBS2’s Ali Bauman.
His little shop has been in Woodside, Queens, for 50 years.
“It’s myself and my wife right now. We are truly a small business,” Owens said.
But since it’s considered non-essential, the shop had to close in March.
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Owens applied for a Paycheck Protection Program loan when the federal relief was passed two weeks ago, but his application is still pending.
“There’s no guidance. You don’t know where you stand in the queue as far as getting help. The banks are pretty much, ‘Don’t call us, we’ll call you,'” Owens said.
Thursday, the Small Business Administration said the $349 billion program has already run dry and isn’t accepting any more applicants.
“We don’t know if we’re in before they ran out of money or we are out of luck with that,” Owens said.
The PPP loans have a 1% interest rate that don’t have to be paid for six months. The program was designed as an incentive for small businesses to keep workers on their payroll.
When the buck stops for one person, it has a ripple effect.
For example, a Brooklyn home health aid who has been laid off can no longer afford her favorite diner, whose owner now has to cut back on supplies from the nearby hardware shop, where business is down 30%.
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Jaimie Iuculano owns the Handyman Express Inc. hardware store in Nassau County. He was approved for a PPP loan through his small bank this week.
“This saved all of our employees’ salaries, and they can start spending money at local places as well now,” he said. “All of my subcontractors that have bigger banks are still nowhere with the process.”
“It’s almost like they throw you a life jacket, but they don’t have a rope to pull you back in. So they keep you afloat, they tell you a story, but the farther you keep on drifting away from the boat before somebody actually throws you the line or gives you the funding or even [lets you] know if you’re entitled to it, what do you do?” Owens said.
The SBA says it’s approved more than 1.6 million loan applications.
Senate and White House negotiators have yet to reach an agreement to pass additional funding.