Can NYC help small businesses help themselves?

Last September, Hurricane Ida flooded the basement and backyard of the Taiwanese restaurant that Howard Jeon was trying to open in Long Island City with two partners. Then, officials from the city’s small business service agency came to visit him and gave him disaster loans.

Jeon applied and tried to follow up, but never received a response – or money.

Modupe Akinbolaji’s African clothing store in Brooklyn barely survived the pandemic thanks to federal PPP loans worth about $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 update her website.

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

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

Michelle Feinberg, owner of an embroidery studio in New York and artistic director
Ben Fractenberg/THE CITY

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

But except for a speech at the Federal Reserve Bank of New York from Andrew Kimball, the new EDC chief, administration officials have little more to say about their plans.

“The master plan is a bold, comprehensive five-borough plan with more than 70 initiatives that aim to accelerate the return to pre-pandemic employment while laying the foundation for the city’s economic future,” he said. said Kimball.

To test this 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 critical and the need, say business leaders, is urgent. Since the start of the pandemic, some 26,000 businesses in the city have closed their doors for good; almost all of them had less 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 continues at a chilling pace. New York City has recovered only 71% of the jobs lost during 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 jumped to an average of 25,000 per month, said Scott Newbert, a professor at Baruch College who has analyzed statewide licensing data. Their survival will be crucial in rebuilding the city’s trade base.

A more responsive city

“My takeaway from the pandemic is that there are a lot of resourceful people out there, but no one can make decisions,” said Michael Watts, co-owner of Cocktail Caterers. “No one has ever been able to give me an answer on loans or scholarships. They say, ‘Let me pass the baton to you. Let me pass it on to you.

When the pandemic hit, all 48 events Watts had on his schedule were canceled, and he was left with no income and in desperate need to help. He spent hours on the phone trying to save his business. Eventually, Watts landed a federal loan from the Small Business Administration and a $100,000 loan from New York State, 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.

In 2019, after successfully selling dumplings at street fairs and in a food truck, Jeon and her partners set out to find a food court space in Long Island City. They signed a lease this summer and were preparing for the grand opening of Yumpling. But obtaining permits and completing construction took much longer than expected, pushing the launch back to March 2020, just when COVID first hit the city.

Yumpling owner Howard Jeon works at the counter of his restaurant in Long Island City on Friday, April 22, 2022.

Yumpling owner Howard Jeon works at the counter of his restaurant in Long Island City on Friday, April 22, 2022.
Hiram Alejandro Durán/THE CITY

With the help of a counselor from the LaGuardia College Small Business Center, Jeon was finally able to secure a PPP loan and a small grant. He says his business has stabilized. But Jeon remains convinced that the city does not meet the needs of businesses like this.

“If they could just find a way to reduce response times,” he said, as he never received help after Hurricane Ida’s losses. “It takes forever for people to respond.”

The Adams plan promises to tackle the problem directly. Within a year, he plans to launch a small business portal that he says will encompass all small business interactions with the city, including filings, permits and inspections.

“The days of having to go to a dozen different offices and websites to engage with the city will come to an end, the Adams plan promises.

In January, the mayor also announced that he had ordered all key business-facing agencies to compile a list of the 25 regulations that generate the most violations and suggest ways to reduce fines, issuing only warnings for first violations and allowing companies time to correct violations without penalties.

While Adams set a three-month deadline, the city has yet to report on the results of the effort.

Capital requirements

Raising capital is the biggest challenge for black businesses and other minority businesses that have been devastated by the pandemic. Akinbolaji’s African Queen Boutique remains open only because of the pandemic loans it has received. The rebuilding of his business was helped by the additional $10,000 loan from the Brooklyn Chamber’s Social Justice Lending Program, which helps businesses that don’t pass the financial tests that banks apply to their loans.

« BIPOC [Black, indigenous, and people of color] companies need capital with very different standards. Their capital issues are another form of displacement that we need to recognize and provide special programs to help them,” said Randy Peers, president of the Brooklyn Chamber.

The loan may 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 efforts of the Brooklyn Chamber, the Adams plan includes a new $75 million Small Business Opportunity Fund, providing loans to start-up and long-time businesses, including the many BIPOCs and immigrant entrepreneurs who n have not received federal financial assistance during the pandemic.

Even businesses that have received help say the city can do more. Feinberg says his New York embroidery studio could take giant leaps forward if the city required 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 though she automates her operation.

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

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

Since October 1, the LaGuardia Small Business Center says it has received more than 130 requests for help from startups, a 50% increase from the previous year. And Newbert says many entrepreneurs who come to Baruch are often trying to start businesses that will take advantage of changes the pandemic has brought to the economy, such as remote working.

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 retail vacancies in the borough and see how to help entrepreneurs grow to occupy these spaces.

In its plan, the Adams administration announced new support for business improvement districts and merchant associations aimed at bringing help closer to businesses that need it.

City Hall also embraced a program launched by the Partnership for New York City in September 2020 that embedded experts in the five borough chambers of commerce, who then traveled to neighborhoods to help small businesses there.

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