The $484 billion stimulus bill the U.S. House of Representatives is expected to pass this week will help infuse some of New York City’s small businesses with much-needed cash, but could leave out hundreds—if not thousands—of the city’s smallest enterprises, advocates said.
“It’s starting to feel pretty desperate,” said Marco Shalma, a co-founder of the Bronx Night Market, a consortium of 700 small businesses around greater New York City.
The latest stimulus bill, passed by the Senate on Tuesday, will replenish two funds for small businesses that were drained dry in just two weeks since applications were opened. It will infuse another $310 billion into the Paycheck Protection Program, or PPP, and pour another $60 billion into a disaster loan program for small business, known as the Economic Injury and Disaster Loan Program. The next multibillion-dollar stimulus comes as New York City’s City Council weighs its own measures to aid small businesses, including better protections against eviction.
“We have to advocate for our small businesses, particularly those in the hospitality industry now who are being hit the hardest,” said City Council member Keith Powers, a Democrat who represents a swath of Manhattan’s East Side, including half of Midtown.
Despite being in the epicenter of the coronavirus outbreak, New York state’s small businesses received around 6% of the PPP funding, according to a report last week form the Small Business Administration, which handles the two programs. If the SBA’s figures are representative of this next batch of stimulus, New Yorkers can expect an infusion of $15 billion to $20 billion in federal PPP loans into the state’s small businesses, a fraction of which will go to New York City.
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Many business owners in the Big Apple reported trouble applying for federal loans because of technical issues with the online system in the beginning. Some had trouble getting loans because they didn’t have an established relationship with a bank participating in the program, while others had yet to submit an application before the funding ran out.
One major criticism has been that larger enterprises with pre-existing bank relationships were able to jump on the disaster loan programs quickly and sapped it of resources before smaller, more vulnerable establishments could get in. One way the new legislation addresses that is by setting aside $90 billion in loans for smaller, community-based lenders.
But so far, 84% of Brooklyn businesses that applied had not received funding by the time the PPP loan program ran out of money last week, according to a survey the Brooklyn Chamber of Commerce released on Tuesday. That number was even higher among women- and minority-owned businesses, the survey of 281 businesses found.
While the federal stimulus programs were a step in the right direction, Randy Peers, president of the Brooklyn Chamber of Commerce, said they need more funding and some reforms.
“It has been abundantly clear they are underfunded and lean toward benefiting larger, well-established businesses with existing ties to lenders,” he said, a reality that’s limiting resources for mom-and-pop businesses.
The office of city councilman Mark Gjonaj, chairman of the small business committee, has been flooded with calls from business owners frustrated and confused about the federal programs, said his chief of staff. The biggest concerns have been that their banks aren’t participating in the program or that there’s no one to ask for guidance on a loan application. Some don’t qualify for the program and are out of options.
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To address the harrowing need among businesses, the City Council introduced, during its first-ever remote hearing Wednesday, a COVID-19 relief package. It includes legislation that would punish landlords who threaten a commercial tenant who cannot pay because of the pandemic with a civil penalty of $10,000 to $50,000. Another measure would suspend personal liability on commercial leases to protect business owners from bankruptcy and personal financial ruin, said councilwoman Carlina Rivera, who’s co-sponsoring the legislation with Speaker Corey Johnson.
“These businesses are closing and losing weeks of income to no fault of their own,” Rivera said at the remote council meeting.
Rent was a key issue uncovered by the Brooklyn Chamber of Commerce survey, which showed nearly half of respondents missed their establishment’s April rent payment.
A third piece of legislation would suspend sidewalk cafe fees in order to give the city’s crippled restaurant industry a small break.
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Shalma, of the Bronx Night Market, said of the hundreds of businesses in his network “the unanimous response is ‘we haven’t gotten anything.’”
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He said the next step has to be a bigger focus on the city’s thousands of micro businesses, such as sidewalk grocers, food stands and food trucks, where owners might not have the language skills or financial sophistication to wade through complicated assistance applications.
“We’re a walking city, in many ways they are the lifeblood of the community,” Shalma said. “It’s one sector that I won’t say is ignored, but no one has addressed it yet.”
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