New York Community Bank is one of the largest banks in the United States and is headquartered in Westbury, New York. The bank also has offices in Arizona, Ohio, New Jersey, and Florida.
New York Community Bank is affiliated with the Paycheck Protection Program (PPP) offered by SBA. Below we have discussed what the PPP loan program is and if the New York Community Bank still offers the loan or not.
As of 4 May 2021, the New York Community Bank has stopped accepting new applications for the PPP loan program. However, if you were provided a PPP loan through the New York Community Bank in 2020, you are eligible for loan forgiveness.
The New York Community Bank has also initiated the loan forgiveness program this year for small businesses. When the automated process for your loan is ready, you will receive an email with instructions.
On 27 December 2020, a stimulus was passed by Congress to aid businesses. As a result, PPP loan applications were available till 31 March 2021, and all types of borrowers were also eligible for the loan.
Background
The PPP loan is the component of CARES, and the SBA administers them. The sole purpose of the loan is to keep the staff of small businesses employed during this raging pandemic.
Under the PPP loan program, the loan amount is 2.5 times higher than the trailing twelve-month monthly average payroll costs of ten million dollars.
Loan Forgiveness
Loans are only considered forgivable if the businesses/borrowers meet the retention criteria and have used the funds for payroll, expenses, and mortgage costs, during the 8 to 24 week disbursement period. In that case, the loan interest rate will be 1%. Some PPP loans mature in two years while others mature in five years, and they require no personal guarantee and collateral.
Types of Loans offered by New York Community Bank
No Other Business loans were identified; therefore, we have thoroughly discussed the PPP Loan program below.
Paycheck Protection Program (PPP)
On 27 December 2020, a stimulus was passed by Congress to aid businesses. As a result, PPP loan applications were available till 31 March 2021, and all types of borrowers were also eligible for the loan.
Background
The PPP loan is the component of CARES, and the SBA administers them. The sole purpose of the loan is to keep the staff of small businesses employed during this raging pandemic.
Under the PPP loan program, the loan amount is 2.5 times higher than the trailing twelve-month monthly average payroll costs of ten million dollars.
Loan Forgiveness
Loans are only considered forgivable if the businesses/borrowers meet the retention criteria and have used the funds for payroll, expenses, and mortgage costs, during the 8 to 24 week disbursement period. In that case, the loan interest rate will be 1%. Some PPP loans mature in two years while others mature in five years, and they require no personal guarantee and collateral.
Interim Guidance and Revision
Since the loan was announced, several guidelines, interim laws, and rules have been published to clarify the loan program. As a result, the application process for the loan was streamlined, the certificate for liability was explained, and borrowers/businesses that were eligible were defined and recognized.
Round 1: Result
The initial PPP loan bill was authorized for 349 billion dollars; the loan program started in April 2020 but depleted in just two weeks. Later in the month, Congress announced a loan amount of 310 billion dollars, taking the total loan amount to 659 billion dollars. The deadline for loan application was initially 30 June 2020 but was extended to 8 August 2020. On 8th August last year, the program came to an end.
PPP Loan Program Round 2
On 21 December 2020, Congress announced a PPP loan of 284 billion dollars and changed the original PPP program.
Expansion of eligibility and benefits
The new changes targeted the hardest-hit sectors, such as the accommodation sector (hotels, restaurants), who were eligible for a loan that was 3.5 times their monthly payroll. In addition, round 2 of the PPP Loan program also recognized additional borrowers:
- Chamber of commerce
- Association of traders
- Business leagues
Revision of Loan Forgiveness Criteria
In Round 2 of the PPP loan program, the criteria for forgiveness were also revised. Under the new changes, the businesses/borrowers spent 60 % instead of 75 % of the loan on their business needs (payroll expenses, mortgage costs, rent).
New York Community Bank Interests, Fees, and Loan Options
Apart from SBA loans and revolving lines of credit, information regarding fees and interest rates of other loans has not been provided by CIBC Bank USA.
8. PPP Loan Program
- Interest rates: 0 % for a forgiven loan, 1 % if the loan is not forgiven (changes made earlier this month)
- Fees: None
What Lending Criteria does New York Community Bank Have?
Below is the basic lending criteria that all the banks follow:
- Credit Score
- Annual Revenue
- Business Plan
- Collateral
- Time in Business
Credit Score
Credit is the most important component of all types of businesses, whether they are small or large. Lenders will always analyze the business's credit score and then decide whether it can pay the loan or not. Therefore, the best way to maintain a healthy credit score is to pay your dues on time.
Credit scores can also be easily obtained from several agencies such as Equifax, Dun & Bradstreet, and Experian. Another way of maintaining a positive credit score is to have a low debt-to-income ratio. Lenders will not invest in businesses that don't have a good credit score.
Annual Revenue
Another important factor that the lenders will review is the annual revenue of the business. Most lenders will only lend to those businesses that have been profitable for the last two years or more. Businesses need to make sure that all the financial statements are accurate and up to date.
Lenders will also look at specific details such as the current account (current assets divided by liabilities) and ask for copies of bank statements and transactions. However, businesses will only be eligible for a loan if their cash flowing is growing.
Business Plan
A minority of lenders might not ask for a business plan, but most of them do, and businesses need to come with a clear and concise proposal. Usually, lenders require the business plan to know the purpose of the loan and discuss the business's stability.
One of the main components of business plans is the resumes of managers and staff. However, despite having a clear business proposal, the lenders will still ask for proof of the staff's ability and relevant credentials and experience.
Collateral
Collateral is an essential requirement, and most lenders will not provide a business loan if it cannot give collateral. Collateral can be anything like equipment or property. The collateral will also decrease the risk for the lender as it will have an asset in hand, so if the company fails to pay the loan, the collateral can be paid to fund the damages.
The owner of the company needs to provide a personal guarantee and will also need to submit some essential documents:
- Driver’s license
- Business license
- Tax returns (personal)
- Tax returns (business)
- Insurance plans of business
- Records for payroll
- Detail of owner
- Other financial obligations
Time in Business
Most banks are hesitant to lend loans to new companies that have been active for just a few months. Lenders cannot trust small businesses or startups that have just entered the market because they don't have a proper credit score and the cash flow is usually unstable. Banks will most likely lend to businesses that have been active for more than two years.
New York Community Bank Application
Following is the application procedure of all the banks that borrowers have to follow:
Before you apply for a loan, ensure that all your documentation is up to date. Also, organize all the documents properly, and if some essential documents are missing, contact the relevant authorities. Collect all the financial information about your business and pay all the dues as soon as possible.
- Personal and Business credit scores and history
- Account statements of the business
- IRS documents, tax returns of the business, and the owner as well.
- Other important financial documents such as unpaid invoices, credit card details, and accounts receivable.
- Legal contracts (leasing, franchising, incorporation)
Eligibility Criteria for Paycheck Protection Program
Following borrowers qualify for loan forgiveness during the 8 to 24 period of loan disbursement:
- Compensation and employee levels are maintained
- 60 % of the funds are business expenses such as payroll costs
For more information, check out the website of New York Community Bank.
Summary of New York Community Bank Loan Options
Unfortunately, the only business loan New York Community Bank offers is the PPP loan forgiveness; however, they offer personal loans. New York Community Bank is helping borrowers out who are eligible for loan forgiveness but cannot apply for a PPP loan because the program was ended by SBA a few months ago.
The New York Community Bank has also recently initiated the process of loan forgiveness for small businesses.