The NYC Small Business Loan Program Halted Due to an Overabundance of Applicants

A new city program approved a $50,000 five-year loan below-market interest rate for Subba Lama, the owner of a Bubble Tea shop in Queens, New York, who will use the loan to purchase much-needed equipment, make repairs, and maintain the shop in the long run.

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The Nepali immigrant who has been residing in the US since 1999 is one of the lucky loan recipients of the small business program before it stalls in the near future. There was an unanticipated surge of applications for the program just under a month after its launch, so New York City announced Monday that it is pausing the program.

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New York City, in partnership with Goldman Sachs Group Inc. and Mastercard Inc., unveiled on Jan. 23 what it called the largest public-private loan fund ever established for small businesses in the history of the city. Originally, the program was supposed to fund 1,500 businesses, but since its debut, New York City's Department of Small Business Services has received over 10,000 applications. In an effort to expand the program, the department has said that it is working on determining when it will begin accepting applications again. 

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“We have paused the intake of applications, but our partners are working at full speed to process those that are already in the pipeline and disburse funds as soon as possible to eligible small businesses,” said Kevin D. Kim, commissioner of the New York City Department of Small Business Services. 

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Goldman Sachs and Mastercard have also been notified of the pause by the Department of Small Business Services. In response to the loan program, Goldman Sachs, which contributed approximately $50 million to the program, declined to comment. There was no response to an inquiry for comment from MasterCard immediately. 

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A fixed below-market interest rate of 4% is set for loans ranging from $2,000 up to $250,000, regardless of the amount of the loan, which is a welcome development at a time when many small businesses are still struggling to recover from the pandemic in a big way.

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It has been estimated that more than 4,000 private businesses are closing down in New York City from 2019 to 2021 during the height of the pandemic, according to the city comptroller's office.

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“ It’s very exciting for me and we are very happy. I’m getting a very low interest in my shop, which I have opened in 2017,” Lama, who established Momochai in 2017.