NEW YORK: Some small PR shops hurt by the economic fallout from the coronavirus pandemic have at least two lifelines to grab: a New York City program offering loans and grants and the payroll protection program signed into law last Friday as part of the federal stimulus law.
Many firms need the help. PR agencies, especially in hard-hit sectors like hospitality, are feeling the crunch and laying off staff. A WalletHub small business survey released on Wednesday found that 87% of business owners say the pandemic has hurt their companies, and 35% say they will survive for less than three months under current conditions.
New York City's Department of Small Business Services has unveiled two initiatives to help: the Employee Retention Grant program and the Small Business Continuity Loan Fund. For both, businesses must be located in one of the five boroughs and must prove that revenue has dropped by at least 25% because of the pandemic.
The grant program is for firms with fewer than five employees and would cover 40% of payroll costs for two months. The city agency had approved 155 grant applications for $1.14 million in relief as of Monday, according to a Small Businesses Services spokesperson.
The loan fund program offers zero interest loans of up to $75,000 to businesses with fewer than 100 employees. The loan-application process opened March 27, and it has received more than 10,000 pre-applications, according to a spokesperson, who said the city is expecting to award about $20 million in loans.
The $350 billion federal payroll protection program does not provide grants or direct loans from the federal government, but instead guarantees loans of up to $10 million for companies with no more than 500 employees.
The exact regulations for the program, which is being managed by the Small Business Administration, are being written.
"Many firms are now working with us on this," said Michael Lasky, attorney and chair of the PR practice and co-chair of the litigation practice at law firm Davis & Gilbert.
The loans will not be ready until the Small Business Administration establishes regulations and processes for the programs, he explained.
"Rest assured, there will be an avalanche of applications filed thereafter," he said.
The actual loans come from banks and other regular business lenders and are meant to cover payroll costs like salary and health insurance, rent, utilities and mortgage interest payments, Lasky explained. However, the loans cannot be used to cover salaries of employees making more than $100,000 a year.
The government will forgive loans for up to eight weeks of payroll, rent and utilities and mortgage interest payments starting from the date of loan through June 30, Lasky said, though the exact rules governing forgiveness are complex.
"Even though firms cannot submit their applications right now, smart firms are getting important advice about how the loan and forgiveness programs factually and finally would apply to their businesses and what cost the federal government would cover in loan forgiveness," Lasky added.
Although part of the intent of the program is to help businesses retain employees, Davis & Gilbert partner Justin Pollak said the loans will be forgiven up to the full amount even if a firm has already furloughed staff because of the pandemic.
"But to get the full loan forgiven, they have to bring those people back," he explained, adding that the statute assumes anyone laid off after February 15 lost their job because of the pandemic.