Small Business Administration official answers question about Payroll Protection Program

John Mallano, the deputy director of the New York office of the U.S. Small Business Administration, answered questions about the Payroll Protection Program and the latest information for small businesses.

News 12 Staff

Apr 28, 2020, 1:21 PM

Updated 1,485 days ago

Share:

John Mallano, the deputy director of the New York office of the U.S. Small Business Administration, answered questions about the Payroll Protection Program and the latest information for small businesses.
Below find more information from the Small Business Administration about what the Payroll Protection Program is and how it works:

The main role of the Payroll Protection Program is just that – keeping workers on payroll and employed.

As many members of Congress have stated, many aspects of the CARES Act was intended for small businesses – defined generally as any firm with 500 or fewer employees. Supposedly, Congress will be addressing this in the short term, but as of now, we can only go by what they passed and signed into law. Congress makes the laws and federal agencies, like SBA, administer what they pass and is signed into law.

Regarding the pacing mechanism and other information pertaining to some of the questions for background/your situational awareness:

SBA notified lenders two days ago that pacing of applications into the ETran system would occur, meaning all lenders would be able to submit at the same rate per hour. This was to ensure that all lenders, no matter the size, have equal access to the system and ETran is not overwhelmed. If a lender goes above the pacing limit they will get timed out. The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the ETran system.

This is on top of every bank being allowed one grouping of 5,000+ PPP applications into the system. The SBA is actively working to ensure system security and integrity while loan processing continues.

Regarding large corporations, I would direct you to the congressional approved law which had a specific carve out for the Hospitality & Food Service industry (NAISC Code 72). The PPP limits loan recipients to businesses with fewer than 500 employees and revenue of less than $2.5 billion. But Congress made an exception for restaurants and other food service businesses that employ fewer than 500 people per location, meaning that restaurant chains are as eligible for the loans as a neighborhood restaurant or bar. The Long Island Business News recently carried an Associated Press story outlining this. Also included in this is any franchise location of a business/corporation. Right there in the CARES Act, in black and white type face. Section 1102 of the CARES Act:
“(iv) WAIVER OF AFFILIATION RULES.—During the covered period, the provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor regulation, are waived with respect to eligibility for a covered loan for—
“(I) any business concern with not more than 500 employees that, as of the date on which the covered loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;
“(II) any business concern operating as a franchise that is assigned a franchise identifier code by the Administration; and
“(III) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681).”

Regarding - “how long the money will last” – please remember first, this is not money the SBA is providing. The agency is guaranteeing private lending dollars from bank and lenders. It’s a subtle difference, but a large one in that the government is not doling out dollars through direct lending. That said, it’s tough to estimate and we cannot really do so. The facts are: during the initial Congressional funding in the CARES Act, which was at $349 billion, the congressional appropriation was expended in two weeks. The SBA guaranteed more loans in those 14 days than the agency had done in the past 14 years.

Number-wise, Congress re-appropriated $310 billion to CARES, about 39 billion less during this round which has more banks participating and ready to go with applications.


More from News 12
1:48
STORM WATCH: Warm, hazy and humid today; tracking thunderstorms for Thursday

STORM WATCH: Warm, hazy and humid today; tracking thunderstorms for Thursday

1:38
36th Fleet Week kicks off in NYC with Salute to Ships at Fort Hamilton

36th Fleet Week kicks off in NYC with Salute to Ships at Fort Hamilton

1:40
'Following my dream.' Brooklyn native heads to Paris Olympic Games

'Following my dream.' Brooklyn native heads to Paris Olympic Games

0:23
TRAFFIC ALERT: Exit 1 ramp to Gowanus Expressway to be closed for 3 nights

TRAFFIC ALERT: Exit 1 ramp to Gowanus Expressway to be closed for 3 nights

0:34
Police: Suspects wanted for making 'anti-sexual orientation statements,' assaulting person in Williamsburg

Police: Suspects wanted for making 'anti-sexual orientation statements,' assaulting person in Williamsburg

2:42
Garden Guide: This is why you should grow Geraniums this summer

Garden Guide: This is why you should grow Geraniums this summer

0:59
NYPD: 2 people shot in Crown Heights

NYPD: 2 people shot in Crown Heights

1:51
News 12 gets inside look at program that provides free food to Brooklyn seniors

News 12 gets inside look at program that provides free food to Brooklyn seniors

2:10
Swagga Jumpers member describes journey to the double dutch world championships

Swagga Jumpers member describes journey to the double dutch world championships

2:02
The Notorious B.I.G. continues to inspire art in Brooklyn

The Notorious B.I.G. continues to inspire art in Brooklyn

1:24
Family mourns WWII veteran from Ocean Hill who died at 103

Family mourns WWII veteran from Ocean Hill who died at 103

1:16
NYPD: 1-year-old in critical condition wasn't in car seat during Brownsville crash; drivers face charges

NYPD: 1-year-old in critical condition wasn't in car seat during Brownsville crash; drivers face charges

0:28
Flatlands crash flips vehicle in intersection

Flatlands crash flips vehicle in intersection

2:01
Free immigration resources to begin May 30 in Bensonhurst

Free immigration resources to begin May 30 in Bensonhurst

1:59
Owner of legal marijuana shop: Illegal shops close during the day and open at night to avoid inspections

Owner of legal marijuana shop: Illegal shops close during the day and open at night to avoid inspections

Power & Politics: Ask Mayor Eric Adams

Power & Politics: Ask Mayor Eric Adams

0:38
Elected officials, advocates rally to restore funding for community composting programs

Elected officials, advocates rally to restore funding for community composting programs

1:34
East New York tenant in once-leaky apartment says the rodents have taken over

East New York tenant in once-leaky apartment says the rodents have taken over

1:46
Susan Sarandon, public advocate work in Dumbo restaurant to shine light on ‘One Fair Wage’ mission

Susan Sarandon, public advocate work in Dumbo restaurant to shine light on ‘One Fair Wage’ mission

2:06
Williamsburg building owner issued violation following partial roof collapse

Williamsburg building owner issued violation following partial roof collapse