Can NYC Help Small Businesses Help Themselves?

Last September, Hurricane Ida flooded the basement and backyard of the Taiwanese restaurant Howard Jeon was trying to open in Long Island City along with two partners. Afterwards, officials from the city’s Small Business Services agency came to visit and hook him up with disaster loans.

Jeon applied, and attempted to follow up, but never got a response — or any money.

Modupe Akinbolaji’s African clothing boutique in Brooklyn has barely survived the pandemic thanks to federal PPP loans worth some $40,000 and $10,000 from the Brooklyn Chamber of Commerce’s Social Justice Fund, designed to help businesses owned by people of color.

But today, Akinbolaji says she needs more money to pay for an assistant and to update her website.

During 2020, Michelle Feinberg successfully transitioned her embroidery business to manufacture PPE gowns and other related items. New York Embroidery Studio (NYES) is now winning large government contracts for such equipment. Mayor Eric Adams even visited her facility at the Brooklyn Army Terminal in Sunset Park to announce that NYES would hire 500 more people to fulfill another federal contract.

But Feinberg, too, says she needs more financial help from the Army Terminal, run by the city’s Economic Development Corporation (EDC), to build out her work space.

In March, Mayor Eric Adams announced a sprawling “Rebuild, Renew, Reinvent” economic plan, which he called a blueprint for the city’s economic recovery.

But with the exception of a speech at the Federal Reserve Bank of New York by Andrew Kimball, the new head of the EDC, administration officials have had little more to say about their plans.

“The blueprint is a bold, comprehensive, five-borough plan with over 70 initiatives that aim to accelerate the return to pre-pandemic employment while simultaneously laying the foundation of the city’s economic future,” Kimball declared then.

To test that proposition, THE CITY spoke with small business owners about what they need from the Adams administration and compared those needs to what’s in the plan.

The timing is crucial, and the need, say business leaders, is urgent. Since the beginning of pandemic, some 26,000 city businesses have closed their doors for good; virtually all of those had fewer than 10 employees. Black owned businesses were twice as likely to fail as others, according to new research the Adams administration disclosed in its economic plan.

Worse, the city’s recovery is proceeding at a glacial pace. New York City has regained only 71% of the jobs lost in the pandemic; the nation as a whole has recovered more than 90%, according to the Department of Labor. The city’s unemployment rate fell to 6.5% in March; the national figure is 3.6%.

But in recent months, the number of new business licenses has surged to an average of 25,000 a month, said Scott Newbert, a professor at Baruch College who has analyzed statewide license data. Their survival will be crucial to rebuilding the city’s business base.

A More Responsive City

“My takeaway from the pandemic is that there are many resourceful people out there but no one can make a decision,” said Michael Watts, co-owner of Cocktail Caterers. “No one could ever give me an answer about loans or grants. They say, ‘Let me pass you on. Let me forward you.’”

When the pandemic hit, all 48 events Watts had on his schedule were canceled, and he was left without any revenue and in desperate need to help. He spent hours on the phone trying to save his business. Eventually, Watts landed a federal Small Business Administration loan and a $100,000 New York State loan, which saved his business.

Jeon tells a similar story. A more responsive city government would have helped his dumpling business, says the former teacher turned restaurateur.

Back in 2019, after successfully selling dumplings at street fairs and out of a food truck, Jeon and his partners went looking for restaurant space in Long Island City. They signed a lease in the summer and were getting ready for the grand opening of Yumpling. But getting the permits and completing construction took much longer than anticipated, pushing the launch to March of 2020, just as COVID first struck the city.

With help from a counselor at the small business center at LaGuardia Community College, Jeon was eventually able to get a PPP loan and a small grant. He says his business has stabilized. But Jeon remains convinced the city is unresponsive to the needs of businesses like this.

“If they could just find a way to lower response times,” he said, since he never got any help after Hurricane Ida losses. “It takes forever for people to respond.”

The Adams plan promises to confront the issue directly. Within a year, it intends to launch a small business portal that it claims will encompass all interactions small businesses have with the city, including filings, permits and inspections.

“The days of going to a dozen different offices and websites in order to engage with the City will come to an end,” the Adams plan promises.

In January, the mayor also announced he had ordered all the key agencies that have contact with businesses to come up with a list of the 25 regulations that generate the most violations and purpose ways to reduce fines, issuing only warnings for first time violations and allowing businesses time to fix violations without penalties.

While Adams established a three-month deadline, the city has not yet reported on the results of the effort.

Capital Needs

Raising capital is the biggest challenge for Black and other minority businesses that were devastated by the pandemic. Akinbolaji’s African Queen Boutique remains open only because of the pandemic loans she received. Building back her business has been helped by the additional $10,000 loan from the Brooklyn Chamber’s Social Justice loan program, which helps businesses who don’t meet the financial tests banks apply to their lending.

“BIPOC [Black, indigenous, and people of color] businesses need capital with very different standards. Their capital problems are another form of displacement that we need to acknowledge and come up with special programs to help them,” said Randy Peers, president of the Brooklyn Chamber.

The loan might not be enough for Akinbolaji, who turns 60 in September and wonders if she should try to sell her business.

“I need an assistant, and I can’t afford it. And I need help with my website and someone to maintain it, which I can’t do myself,” she said.

In line with the Brooklyn Chamber’s effort, the Adams plan includes a new $75 million Small Business Opportunity Fund, offering loans to both early-stage and long-standing businesses, including the many BIPOC and immigrant entrepreneurs who did not receive federal financial assistance during the pandemic.

Even businesses who have received help say the city can do more. Feinberg says her New York Embroidery Studio could make major leaps if the city would mandate that a certain percentage of PPE purchased by local hospitals and other institutions be made in the city. Positions at her company pay an average of $20 an hour, even as she automates her operation.

“We are building a sustainable supply chain,” she said. “We really want to reinvest in manufacturing rather than just buy it from China.”

The Adams plan promises more help for companies like hers. Claiming that more consumers want locally made products, the administration promises a new vertical manufacturing building at the Brooklyn Navy Yard and similar spaces at the Bush Terminal and Brooklyn Army Terminal, both in Sunset Park.

Since Oct. 1, the small business center at LaGuardia says it received more than 130 requests from startups for help, a 50% increase from the year ago period. And Newbert says many of the entrepreneurs coming to Baruch are often trying to start businesses that will take advantage of the changes the pandemic has wrought on the economy, such as remote work.

The Manhattan Chamber of Commerce says it is seeing the same phenomenon and just received an $800,000 grant from Rep. Carolyn Maloney to research the borough’s retail vacancies and see how to help entrepreneurs scale up to fill those spaces.

In its plan, the Adams administration announced new support for business improvement districts and merchants associations designed to bring help closer to firms that need it.

City Hall has also embraced a program launched by the Partnership for New York City In September 2020 which embedded experts in the five borough chambers of commerce, who then went out into the neighborhoods to help small businesses on site.

This article was originally posted on Can NYC Help Small Businesses Help Themselves?