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No Small Relief: Strengthening NYC’s Most Vulnerable Small Businesses

Report - December 2021

No Small Relief: Strengthening NYC’s Most Vulnerable Small Businesses

New York needs a long-term small business recovery plan that is squarely focused on boosting the smallest, most vulnerable businesses—one that supports them on the long recovery ahead and gives them the best chance of coming back even stronger. This blueprint lays out ten actionable policies that New York City and State can implement in the year ahead.

by Mark Foggin and Jonathan Bowles

Tags: economic opportunity small business immigrants low income economic growth entrepreneurship


The broad reopening of New York City’s economy has given small businesses across the five boroughs the first real sense that a sustainable recovery has arrived. Most limitations on indoor commerce have ended, a growing number of major employers are making plans to bring back office workers, and New Yorkers in every corner of the city—buoyed by vaccination rates approaching 80 percent—are venturing beyond the safety of e-commerce to spend money at local businesses. Many of the city’s small firms that have survived until now have also benefited from forgivable Paycheck Protection Program (PPP) loans and other forms of cash assistance.

But New York’s small businesses are by no means in the clear. Indeed, for a large share of the city’s small businesses, the next 6 to 12 months will be every bit as challenging. Most will have to cover months of back expenses—going well beyond deferred rent—despite earning a fraction of usual revenues during the past year.

Many businesses located in communities of color will have to grapple with additional challenges. Disproportionately high unemployment and lower vaccination rates in these neighborhoods will likely dampen spending at local businesses. Far fewer businesses in these communities were able to benefit from government relief like PPP or take advantage of city initiatives like outdoor dining and Open Streets. Most importantly, an alarmingly large share of the city’s minority- and immigrant-owned businesses were barely hanging on even before the pandemic.

For these small businesses, it’s not just to help them stay afloat until the city’s economy rebounds to pre-pandemic levels. New York needs a long-term small business recovery plan that is squarely focused on boosting the smallest, most vulnerable businesses—one that supports them on the long recovery ahead and gives them the best chance of coming back even stronger. This report offers a blueprint for creating an equitable, long-term recovery for New York City’s small businesses.

Informed by more than 50 interviews with business owners and small business experts, and roundtable discussions with business leaders located in Southeastern Queens, Central Brooklyn, Chinatown, Harlem, the South Bronx, and the West Bronx, our blueprint is focused on actionable policies that New York City and State government leaders can implement this year.

Our ideas are focused on two main themes: 1) Go beyond short-term relief and help strengthen the city’s most vulnerable businesses; 2) Unleash a wave of new business formation by entrepreneurs of color.

The blueprint, researched and written with support from JPMorgan Chase, includes the following ten policy ideas:

  1. Establish a Technical Assistance Corps to bring door-to-door counseling to every small business operating in a low- or moderate-income neighborhood by the end of 2022
  2. Spark 10,000 new Black- and Hispanic-owned businesses by 2026
  3. Create neighborhood-level, post-pandemic marketing campaigns to promote local shopping, dining, and services
  4. Build new infrastructure to support commercial districts that don’t have BIDs
  5. Restore New York State’s subsidized Loan Loss Reserve program for CDFIs
  6. Waive all non-life-threatening small business fines for a full year and refund fines and fees incurred since the pandemic hit
  7. Establish a Small Business Digital Acceleration Fund to support implementation and optimization of digital tools
  8. Help BIDs use existing resources to support struggling small businesses by lifting 30 percent cap on subcontracting
  9. Require new regulatory legislation to include a small business economic impact evaluation
  10. Sign legislation making NYC bars, restaurants, and venues eligible
    for temporary liquor licenses

1. Establish a Technical Assistance Corps to bring door-to-door counseling to every small business operating in a low- or moderate-income neighborhood by the end of 2022

The mayor and the City Council should establish a 300-person, multiyear Technical Assistance Corps (TAC) that will visit every storefront business before the end of 2022, providing crucial one-on-one counseling to help strengthen small businesses—particularly minority- and immigrant-owned establishments—in the neighborhoods that were disproportionately impacted by the pandemic. The Technical Assistance Corps should receive sustained funding to embed business advisors with local community-based organizations and in the city’s branch libraries for the long haul—including recent CUNY MBA graduates and digitally savvy, multilingual young adults—in order to develop trust with businesses and to execute on a range of needs, from e-commerce and social media marketing to referrals for legal and accounting assistance to developing new business lines and entering new markets. Most important, TAC members would be charged with meeting business owners where they are: in their storefronts, offices, food trucks, markets, branch libraries, schools, and homes.

One of the clear takeaways from our research is that a large percentage of the city’s small businesses, especially those in communities of color, were extremely vulnerable even before the pandemic. The city’s average minority-owned employer business generated less than half the revenue (45 percent) of the average white-owned employer business.1 Strikingly few of them had built up e-commerce capabilities: too many had no online presence at all; numerous others weren’t taking advantage of marketing opportunities presented by Instagram, Facebook, and Google; and many didn’t have a dependable, high-speed Internet connection.

At the same time, heading into the pandemic, countless small businesses made avoidable financial mistakes, operated with flawed bookkeeping practices, lacked documentation of their profits and losses, or had never established a relationship with a bank, which is a prerequisite for being able to access financing and, often, to access government programs (as was the case with PPP). Many other small firms got hammered with avoidable fines because they weren’t aware of often arcane rules, regulations, or permits that they were supposed to comply with. In fact, just two city agencies—the Department of Consumer Affairs and Worker Protection and the Department of Sanitation—issued violations to businesses totaling more than $70.1 million in fines in 2019 alone.2

In a city where even successful small businesses often get by with razor-thin profit margins, these persistent operational challenges greatly increased the chance of business failures and left them unprepared to take advantage of new opportunities—like the wave of New Yorkers who started shopping online during the pandemic—and unable to demonstrate the financial details needed to qualify for relief programs like the Paycheck Protection Program.

And yet, shockingly few of these enterprises had benefited from business counseling or took advantage of government-supported small business assistance programs prior to the pandemic. That needs to change if small businesses are going to weather these still-difficult times and become stronger and more resilient over the long term.

Meeting this challenge will require an enormous push to meet small businesses where they are. Our research shows that it isn’t enough to simply offer workshops at the 16 borough-based Business Solutions Centers operated by the city’s Department of Small Business Services (SBS)—including just seven that focus on businesses outside the industrial sector. Most small business owners have their hands full running every aspect of their operations and have precious little time to leave their businesses to spend several hours off-site. And online resources are not of much help for the many businesses, often in low-income neighborhoods, that lack access to broadband Internet or whose owners struggle with digital or English literacy. Our interviews for this report revealed that what really works for these businesses are services that meet them where they are: door-to-door outreach and individually tailored advice from knowledgeable individuals who become trusted resources and who follow up and help business owners put it into practice.

“Most business training is just a one-way dog-and-pony show,” says Daniel Murphy, who was, until recently, the long-time executive director of the Pitkin Avenue Business Improvement District in Brownsville. “What we should be doing is sending in specialists to hold their hands—to help them tailor a plan and support them through it.”

“You need boots on the ground,” adds Joyce Moy, who previously ran the Small Business Development Center at LaGuardia Community College. “Our SBDC was most successful during the economic crisis after 9/11 when our team went door to door. The businesses appreciated the human contact.”

But this is exactly what’s missing from the city’s small business assistance approach. Although New York City is home to numerous small business assistance programs and organizations—including Community Development Financial Institutions (CDFIs), Small Business Development Centers, local development corporations, chambers of commerce, and SBS—barely any of the city’s technical assistance providers have the resources to walk commercial corridors daily and work in-person with business owners on a sustained basis. And the few that are consistently doing one-on-one assistance are reaching only a fraction of the small firms that need help.

Likewise, SBS is only reaching a small share of the businesses in need of support. Across all forms of contact—at Business Solutions Centers, by phone, and via mobile outreach—SBS served just over 6,200 business owners from July to October of 2020—about 2.7 percent of all small businesses in the city.3

“We as nonprofits are working hands-on and one-on-one with business owners to get them social media, and get them Shopify accounts, and other technology help they need, but it’s certainly not meeting the needs of a fraction of the population of businesses in the Bronx that need it,” says Kerry McLean, vice president of Women’s Housing and Economic Development Corporation (WHEDco), a South Bronx–based community development organization.

Many communities have business improvement districts or merchant associations, but most of these organizations are focused on cleaning litter and maintaining public safety—and hardly any provide technical assistance or business counseling.

To help close these gaps in small business support, the Center for an Urban Future proposes the establishment of a Technical Assistance Corps that would flood neighborhoods across the city with the in-person help that so many small businesses need. The corps would include approximately 300 city-funded business advisors assigned to neighborhoods across the city and tasked with developing relationships to strengthen businesses and prepare them to take advantage of new opportunities by reaching more customers and new markets.

The Technical Assistance Corps should start by expanding the capacity of effective community-based organizations (CBOs) that have a track record of success. These are the organizations that know their local businesses best, already have the trust of local entrepreneurs, and can reach owners quickly—including home-based businesses, solopreneurs, and microenterprises—but could do more with additional, dedicated business advisors able to meet owners on location. “Community-based organizations who have been working in these communities for decades are in the position to deliver services best,” says Regina Smith, executive director of the Harlem Business Alliance.

 To help create the additional staff resources for CBOs, and to meet the need in communities that lack strong technical assistance organizations, the Technical Assistance Corps should tap local MBA students, retired business executives, and even out-of-school young adults who have lived or worked in these communities, speak the languages of local business owners, and have expertise to offer. Jessie Lee, managing director of Renaissance Economic Development Corporation, a CDFI based in Chinatown, urged the city to replicate what her organization did last summer when they tapped MBA students living in the neighborhood who were home from school to work as volunteers helping small businesses. “These students are digital-savvy, speak the language of our business owners, and went to them to help set up their social media presences,” says Lee.

Brian Gurski, New York managing director at TruFund Financial Services, a national CDFI that supports small businesses, suggests that the city set up a similar program at the City University of New York, which graduates more than 250 students each year with an MBA.4 “We have an incredible public university system with MBAs who can get great applied experience by helping these businesses,” says Gurski. “It’s definitely a resource we’re overlooking.”

Janet Rodriguez, founder and CEO of SoHarlem, a nonprofit that incubates and supports small businesses in Harlem, says that the city should tap out-of-school youth who could help firms with their digital skills and social media savviness. “We have an opportunity now with so many young people who are unemployed and have that technology background, because not everyone has a son or daughter to help them with the technological things needed to run a business these days.”

The commitment to this corps should be ongoing, ideally for a minimum of three years. Short-term funding is an obstacle to building the sustained capacity CBOs need to do business outreach successfully: generating rapport and trust with business owners to help them identify vulnerabilities or opportunities to get stronger. Embedding Technical Assistance Corps members with CBOs for multiyear commitments can help ensure that advisors build rapport and relationships with businesses as well as their peers in other business support organizations, which are the types of relationships needed to help wary small business owners put new knowledge into practice over time.

Why NYC needs to strengthen small businesses and not simply help them weather this storm
In communities across the city, small businesses are desperate for rent relief, cash grants, and regulatory relief—not to mention the return of their customer base. But it would be a mistake for city and state small business assistance to only focus on helping businesses survive the next few months. That’s because, as we learned in interview after interview for this report, an alarming share of the city’s minority- and immigrant-owned businesses were already struggling before the pandemic.

“I have been shocked by how much help the businesses need,” says Camile Newman-Alleyne, director of the Women’s Business Center at the Local Development Corporation of East New York. During the pandemic, Newman-Alleyne has been walking the streets of East New York with a small team to visit with bodegas and other retailers in the community, thanks to a modest state grant her organization received last year.

“In Jamaica, not all the retailers were that profitable to begin with,” adds Aron Kurlander, director of business services for the Greater Jamaica Development Corporation. “Some of them were treading water prior to COVID.”

“A lot of our small businesses here in Harlem aren’t technologically where they need to be,” says Gina Ramcharan, program director of The Lillian Project, a program of Harlem Business Alliance that incubates businesses owned by Black women. “It’s not just bringing them into 2021; some of the small businesses still need to be brought into 2017.”

“Many businesses that we serve do not have computers, do not have tablets,” adds WHEDco’s Kerry McLean. “They just do not have those devices.”

But it isn’t just technology gaps that are hurting the city’s minority- and immigrant-owned businesses. Many need high-quality accounting, legal services, or other advice from trusted professionals. “A lot of low-income entrepreneurs have tax liens that prevent them from growing their business,” says Mary Olushoga, a business specialist for SoBro, a South Bronx–based community development nonprofit. “The state might give an MWBE small business $400,000 contract, for example, which can help them grow to the next level. But to execute that contract, they need to go look for financing. But then that small business owner realizes they have a tax lien, and that disqualifies them for the financing they need.”

“We know that Black-owned and Hispanic-owned businesses in New York were more likely to go into the COVID crisis being categorized as distressed or at risk,” says Brian Gurski of TruFund Financial Services. “As a city, we need to be much more deliberate about building businesses that are built to last.”

Now is the time to invest in one-on-one technical assistance
As New York reopens and small businesses begin to take the difficult steps towards a full recovery, the city has a unique opportunity to help build stronger, more sustainable businesses. A Technical Assistance Corps that meets small businesses where they are could be pivotal in this effort.

“Getting technical assistance to these businesses will be important,” says Aisha Benson, executive vice president of TruFund Financial Services. “We have businesses that have had to pivot. They’ve had to think about new sales channels—restaurants that might need an app so that they can start doing delivery services. But it’s not just a matter of ‘Do they have the capital to do that?’ It’s ‘Do they know about the best systems, and do they know how to implement them?’”

“A lot of small businesses, while amazing, can bring their business up another level if they had some help with strategy, planning, and budgeting,” says Gina Ramcharan of The Lillian Project.

Jeanette Nigro, founder of Perch Advisors, which helps many business-serving organizations across the city, says that navigating the city and state reopening documentation requires a new way of thinking for many small businesses. “It’s not necessarily difficult, but it requires businesses to think through how they articulate the operationalizing of their reopening. It seems like it’s going to be a lot more difficult for communities where information isn’t flowing easily between government agencies and businesspeople. Or where there are language issues.” A Technical Assistance Corps with dedicated staff assigned to neighborhoods for the long haul can provide that conduit, especially in communities that don’t have access to a business improvement district or a robust merchant association. Even after the city and state are fully reopened, this support infrastructure can help boost uptake for a range of government programs and services—from financial assistance for energy efficiency upgrades to contracting and procurement opportunities.

Small business counseling is lacking in the communities that need it the most
New York City boasts one of the nation’s densest small business support ecosystems, but there are troubling gaps. Many of the neighborhoods hit the hardest by the pandemic don’t have many—if any—options for local entrepreneurs to access technical assistance from small business assistance experts. And across the city, the organizations that do have a track record for providing business counseling lack the resources and capacity to deliver their services door-to-door to all of the businesses that need it. As we heard in our research, the result is that a large number of the businesses that entered the pandemic with the greatest structural challenges were also the ones least likely to receive help from the city or a privately run small business assistance organization. A surprisingly large number weren’t even aware of what services are available.

“It has been eye-opening to learn that so many of them just didn’t know where to turn,” says Newman-Alleyne of the Local Development Corporation of East New York.

Lynette Battle, deputy director of the Bedford-Stuyvesant Gateway BID, described a period last summer when she and her small team printed out information and applications for the Paycheck Protection Program and the Economic Industry Disaster Loan and walked door to door to help businesses learn about and sign up for both. “People assume that business owners are hearing about all these programs, but we were approaching owners who had no clue,” Battle says. “To do this grassroots work, it has to be funded.”

“The new requirements are not getting to the restaurants fast enough. A lot of times, they first hear about a new rule or requirement when an inspector shows up,” adds Ricardi Calixti, deputy director of Queens Economic Development Corporation. “The communication gap is serious. Sometimes the BIDs are available to share that information, but if there’s not a BID In their neighborhood, it’s like they’re completely disconnected from the rest of the city.” And it’s a tremendous equity issue, too; many of the commercial corridors without BIDs are in neighborhoods with the highest concentration of minority- and immigrant-owned businesses.

Over the past decade, the city has made strides in putting information about business regulations and compliance online. But some of the small business experts interviewed for this report say that there’s now so much information on the city’s website, stretching across many different agencies’ pages, that trying to navigate it all to find an answer feels overwhelming to even a savvy business owner, let alone one who struggles with English or even literacy in their native language.

“In a community like ours, with limited resources, small businesses are not getting information quickly enough,” says Leslie Ramos, executive director of the 82nd Street Partnership, the business improvement district in Jackson Heights. “The city needs to start decentralizing some of its business assistance. We have a population for whom websites or the Business Solutions Centers are not working. Instead, businesses turn to offices like mine, where we are bilingual and understand the culture. I’m supposed to be serving two-and-a-half blocks in a small pocket of the neighborhood, but during emergencies I wind up serving businesses all through Queens and Brooklyn. The fact that I’m getting all of those businesses showing up at my education and PPE distribution events shows that there’s a failure.”

The de Blasio administration launched a temporary program last November that was designed to fund community-based organizations to help strengthen small businesses in 39 low-income neighborhoods and communities of color. The $700,000 Strategic Impact COVID-19 Commercial District Support grant aims to help nonprofits “conduct outreach and provide technical assistance to connect small businesses, increase awareness and comprehension of new city and state rules and regulations, and strengthen merchant relationships to foster collaboration and increased local organizing.”

While important, the six-month program only scratches the surface of what’s needed. The limited funding does not provide anywhere near the resources that local organizations need to reach small businesses at scale or to provide the door-to-door assistance that our research suggests is so critical. Just as importantly, the one-time funding doesn’t provide enough support for organizations to provide the sustained technical assistance that we think is needed—that would allow business counselors to build relationships and trust.

Embed counselors in neighborhoods so they can build relationships—and trust—with business owners
The business counselors who make up the Technical Assistance Corps should be assigned to a particular neighborhood for the long haul so that they have the time to build trust with business owners—and to understand the particular needs of individual businesses as well as the wider neighborhood context.

“It’s been hard in this community to build a sense of trust with these business owners,” says Newman-Alleyne of the LDC of East New York. “We need more opportunities in this area to interact with businesses. They often get left out—both in the decision-making process and the solutions don’t really trickle down to this neighborhood. When I talk with them, they feel very forgotten.”

Developing individual relationships builds trust. The city has tried a version of door-to-door outreach with its Chamber-On-The-Go program, which brings a small team of specialists to different commercial corridors for a few days or a week at a time. But the results have been slow to take hold, largely because of the temporary nature of the assistance. “It was hard to get any traction that way,” says Gregg Bishop, who served as commissioner of the Department of Small Business Services for much of the de Blasio administration before stepping down in 2020. “It took three or four visits before many of the owners would even talk to us.” Then, by the time the relationship develops, the team moves on.

A city-funded Technical Assistance Corps should assign dedicated business advisors to corridors for multi-year commitments, allowing advisors the time needed to nurture those business owner relationships and create more impact—and prioritizing assignments to neighborhoods where advisors have preexisting connections.

“Black people, we found, really need to be surrounded by resources and individuals who care deeply about their success,” says Regina Smith of Harlem Business Alliance. “Who delivers those types of services? It’s community-based organizations that have been working in these communities for decades. We found that our clients don’t necessarily get that type of love and hand-holding assistance from other entities.”

2. Spark 10,000 New Black- and Hispanic-owned Businesses by 2026

City policymakers and economic development officials should set a goal of increasing the number of Black- and Hispanic-owned businesses by 50 percent over the next five years—and, to meet that goal, implement a series of policies that greatly increase support for aspiring minority entrepreneurs.

Even before the pandemic, fewer than 10 percent of New York City’s businesses—19,406 out of 204,785—were owned by Black and Hispanic New Yorkers, according to the most recent data from the U.S. Census Bureau. Those numbers are likely considerably lower today, following a year in which minority-owned businesses were generally hit hardest by the COVID crisis and yet were least likely to benefit from government support.

There is a unique opportunity right now to increase those numbers. With so many Black and Hispanic New Yorkers out of work and relatively few new jobs opening up, many New Yorkers living in lower-income communities are already turning to entrepreneurship and self-employment out of necessity, just to put food on the table. City economic development officials should be ready to support these low-income entrepreneurs.

Increasing the number of Black and Hispanic-owned businesses by 10,000—or roughly 50 percent more than the number that existed before COVID—won’t just help boost incomes during the nascent recovery; it will help build long-term wealth in communities of color.

“We absolutely see entrepreneurship as part of the way forward, and maybe even the centerpiece of the way forward,” says J.D. LaRock, president and CEO of Network for Teaching Entrepreneurship (NFTE). “In New York City, thousands of people have been unceremoniously dropped from their jobs. Those jobs are not coming back, at least not yet. And many of those workers may not want to return to those lower-wage jobs that they had to begin with. In practical terms, many New Yorkers are saying to themselves, ‘I need to do something now for myself to earn money, to earn money for my families,’—and that’s where entrepreneurship comes in.”

“We need to do all we can to save existing businesses, but the city should also create the environment to support a crop of new businesses,” says Isa Abdur-Rahman, an attorney in Jamaica and the head of the Farmers Boulevard Community Development Corporation.

A certain amount of new business formation will happen even without city support. Indeed, our research shows that there were 810 new business registrations in Brooklyn in July 2020, 466 in September, and 797 in December—up from 183 in January 2020 and 169 in February 2020 (and up from zero in both April and May of 2020). But with the right policies, the city could accelerate this and ensure that entrepreneurs of color are starting a large share of the new businesses.

To help unleash a wave of new Black- and Hispanic-owned businesses, the city should consider launching the following programs and policies:

Provide microgrants to businesses formed by residents of underserved communities before September 2022, tied to technical assistance. The city should offer $5,000 grants for any new business established before next September by current residents of low- and moderate-income (LMI) neighborhoods and communities of color as designated by the city. To help ensure that the city is giving these new entrepreneurs a strong chance to succeed, the funds should be coupled with—and dependent on—the businesses developing a business plan and digital marketing plan with the support of a local technical assistance provider.

Launch startup competitions in three library branches in each borough, with winners getting free rent for a year. The city can support Black and Hispanic entrepreneurs while also helping to fill empty storefronts in communities of color by holding three startup competitions in each borough where the winners receive one year of free rent at one of the neighborhood’s empty storefronts or $25,000 to use as they see fit. The city should partner with library branches in three LMI communities in each borough to host the competitions, with local banks and real estate owners for the awards, and with CDFIs or other community-based small business assistance groups to help the winning entrepreneurs with digital marketing, financial planning, and other aspects of their launch.

Relaunch the New Business Acceleration Team in City Hall and deploy it in LMI neighborhoods across NYC. New York City can support new businesses in communities of color by relaunching the New Business Acceleration Team (NBAT) with greater resources and expanded authority. Formerly based out of City Hall, the NBAT was specifically focused on helping new eating and drinking establishments open faster. NBAT helped to coordinate interagency regulatory issues and streamline the inspection and permitting processes. By one accounting, the time to get restaurants permitted and open dropped from six months to four. Several years ago, however, NBAT was moved out of City Hall and brought under the NYC Department of Small Business Services, and many of its cross-agency functions were dissolved. “SBS will say they do this now,” says one former official. “But it’s a tiny agency that no one really knows about and doesn’t have the visibility inside and outside of government that NBAT did. There’s no longer a clear front door for businesses to city government.” The city should relaunch NBAT, base it out of City Hall again, and for the next year, focus it on helping new businesses get started in communities of color.

Lower the cost of starting a business by ending the antiquated LLC reporting requirement. City officials should lobby the State Legislature to end one of the most egregious and unnecessary burdens on new businesses in New York: the LLC publication requirement. New York’s law requires newly formed limited liability companies to run a public notice in one daily and one weekly newspaper for six successive weeks. These small, obscure legal notices appear among the classified advertisements and include information about the name of the business, the purpose, and the location. Few people see the notices, and for New York City small business owners, the costs can reach up to $2,000, a not insignificant cost for entrepreneurs across the five boroughs but a particularly onerous expense for business owners in lower-income communities. New York is one of just three states to require publication for newly formed LLCs.

Help NYCHA residents launch businesses by expanding the Catering Business Pathways and Childcare Business Pathways Programs—and creating new pathways in other industries. The city should expand its Business Pathways Programs as a way of helping more of the city’s public housing residents turn to entrepreneurship and self-employment, and transform their side hustles and informal ventures into formal businesses. The programs, which provide NYCHA residents with customized training and resources to start businesses, are ripe for expansion at a time when unemployment rates in NYCHA communities—already double the citywide average—have spiked further due to the pandemic. With greater investment, the Business Pathways Programs could enroll more aspiring entrepreneurs, partner more effectively with local business assistance providers and community hubs like branch libraries, and expand into new industries from fashion and wellness to media and technology.

3. Create neighborhood-level post-pandemic marketing campaigns to promote local shopping, dining, and services.

After this cataclysmic year, one of the things New York’s small businesses need most is . . . more business. Following an extended period where most businesses earned a fraction of typical revenues, business owners need customers and sales to return to levels at or close to what they were prior to the pandemic. The city can help with a neighborhood-focused marketing and promotion campaign.

Although it’s likely that spending and sales will pick up again as the city opens up and more residents get vaccinated, a city-funded marketing campaign that’s coordinated with neighborhood shopping districts can help make sure the reopening period is as large and successful as possible—and that people go back to spending their dollars at local neighborhood businesses.

It’s important that this not be a citywide marketing effort, but rather a program that makes modest marketing grants to dozens of commercial districts across the city, enabling local entities to design and implement promotional campaigns that they believe will work best for their particular neighborhoods’ businesses. City officials can make this happen by providing BIDs, merchant associations, chambers of commerce, and other local business entities with marketing grants between $20,000 and $50,000. The city might also provide local groups with a pre-screened list of vendors—including MWBE event production and marketing firms, as well as local artists and designers—who could provide graphic design, outdoor advertising, streetscape improvements, experiential and digital marketing, and other promotional services.

“There needs to be more investment at the local level to help support businesses in doing media and marketing campaigns,” says Oma Holloway, senior program director at Bridge Street Development Corporation in Brooklyn. “We are really depending on local residents to keep supporting small businesses. We need broader campaigns to keep people patronizing local businesses.”

“Promotion is one of those things we really need to do in our area, to inform not only the community but the community at large that we have all these types of businesses that are here and that need support,” says Angel Caballero, executive director of the Davidson Community Center and one of the leading stakeholders of the BJT Bronx Commercial District, which includes portions of Burnside, Jerome, and Tremont Avenues in the West Bronx.

“Once it’s safe for people to be out again, the question becomes what can you do to draw people to the neighborhood,” adds Meredith Phillips Almeida, a nonprofit strategy consultant who is also the former executive director of a BID and LDC on Myrtle Avenue in Brooklyn. “It could be events. Or holiday lights. Or targeted beautification projects along the corridor, like plantings, repainting street poles, or power washing the sidewalks.”

Of course, neighborhoods without an established organization to help carry out such campaigns, like a BID or merchant association, are not in a position to take advantage of this. “A grant like this needs to go to an organization that can do the legwork to implement it,” Phillips Almeida says. “There are a lot of [commercial] strips in lower-income neighborhoods that don’t have those organizations and couldn’t really benefit from this.”

To help solve this in the immediate term—while the city is building up the infrastructure for better business support in all neighborhoods, per this report’s prior recommendation—these local grants could be given to borough-wide organizations, such as chambers of commerce, to implement in neighborhoods without a robust small business intermediary. Doing so might have the added benefit of helping to coordinate promotion across neighborhoods and to avoid having campaigns and events inadvertently compete with one another.

To prime New Yorkers for these hyperlocal campaigns, the city should blanket TV and radio, public signage, and social media feeds with messages championing local shopping and dining as a civic duty for New Yorkers with the means to do so. This might include celebrity New Yorkers from each neighborhood with a local campaign, touting their favorite corridors and streets and enticing residents to get offline and get in line. A campaign like this can remind New Yorkers how critical they are to neighborhood businesses’ survival—and show that dollars go further when spent in the community through the ripple effect on wages, goods, and services.

4. Build new infrastructure to support commercial districts that don’t have BIDs

New York City can strengthen small businesses in communities of color by funding a part-time staff person to support local merchants along retail corridors that currently lack a Business Improvement
District. The resources would go a long way toward empowering merchants associations and other small business support groups in communities lacking the funding mechanism that a BID provides. Many of these local small business organizations operate without the capacity to assign staff to regularly check-in on merchants, communicate information about new city rules and regulations, deliver supplemental services like sanitation and security, or put up holiday lights. Our research finds that small businesses located along commercial corridors without BIDs are at a clear disadvantage in several crucial ways.

In these neighborhoods, small businesses are less likely to hear about important new city requirements, programs, or opportunities. That was painfully apparent during the past year when numerous businesses were in the dark about fast-changing health requirements for businesses, the federal PPP loan program, the city’s new outdoor dining program, and opportunities for merchants to access free personal protective equipment. Neighborhoods with a BID were also better equipped to take advantage of the Open Streets program since it often required staff or volunteers to help coordinate the opening and closing of streets. Other city programs, like the newly launched City Cleanup Corps, present logistical challenges for commercial districts that don’t have an organizational infrastructure to manage the volunteers.

“There’s a lot of things we are excluded from because we are not a BID,” says the head of one business organization. “That does a disservice to any entity that provides services for businesses. We are not able to get information as quickly from the Department of Small Business Services, the NYPD, and other city agencies. And then there are some programs we just can’t take advantage of. You need staff to close streets, and we don’t have funding for that.”

In the Western Bronx, many small business owners that are part of the BJTBronx Merchants Association would like to ultimately establish a BID. Until that happens, though, they would love to at least have a staff person who can provide some support and resources to the local merchants. The district did receive some city funding from the Neighborhood 360 Program, enabling them to hire a temporary staffer, put banners and lights up throughout the district. But leaders of BJTBronx say that the three-year grant is over this year, leaving them once again without a dedicated staff person. “We want to make this a Business Improvement District because when you have a BID, you can do so much more,” says Angel Caballero, executive director of Davidson Community Center and one of the principal leaders behind the BJTBronx Commercial District. “We need funds so we can have another staff person here to assist us and get information on the economic development we can do in this area. We need to continue branding BJT Bronx in our area and build confidence with the local merchants and the community at large. Right now, when we visit merchants, no one believes in us because we don’t have the funds to help them.”

5. Restore New York State’s subsidized Loan Loss Reserve program for CDFIs

New York's Governor can provide a boost to thousands of the city’s minority- and immigrant-owned businesses by restoring a state program that enables Community Development Financial Institutions (CDFIs) to greatly increase the number of microloans they make: the Capital Access Program.

The city’s CDFIs are lifelines for New York’s smallest, most vulnerable businesses and are often the only place where minority- and immigrant-owned businesses can go to get financing. But in February 2020, just weeks before the pandemic took hold, the state’s economic development agency, Empire State Development, stopped providing loan loss reserve funding to CDFIs through its Capital Access Program (CAP), a decision that undercut the ability of CDFIs to make loans in hard times. The program provides matching funds that helped CDFIs to maintain their legally required loan reserves in case borrowers default. The absence of those funds this past year was a huge blow because the pandemic made it significantly riskier for CDFIs to lend capital. Without the state-subsidized loan loss reserves, these non- traditional lenders were forced to devote more of their limited funding to their reserves—rather than lending it out to businesses in need.

“When we have loans on our books, we have a loan loss reserve methodology that’s based on risks. We have to increase reserves during a disaster or a pandemic because it’s uncertain how these small businesses will be able to perform going forward,” says TruFund’s Aisha Benson. “If we were able to secure that loan loss reserve [from the state], then we would not have to set aside money from our own balance sheets as risk protection for these loans, and I can put it out into the marketplace and support more businesses.”

The Capital Access Program frees up more of each participating lender’s capital to put into the hands of qualified low-income business owners. “Without CAP, it’s meant approximately $1 million less in loans that we could make to businesses requesting financing,” says Jessie Lee, managing director of Renaissance Economic Development Corporation, a CDFI based in Manhattan’s Chinatown.

Lee was lucky to be able to make up for the loss of state funding by raising philanthropic dollars, but it wasn’t without consequence. “It delayed financing for small businesses at a time they really need it,” she says. Moreover, Lee says that many smaller CDFIs that provide crucial financing for minority- and immigrant-owned businesses in other parts of the city weren’t able to draw on philanthropic funding.

“If you are a CDFI that doesn’t have a link to private funders, it’s very difficult to do lending right now. The Capital Access Program is really critical for a lot of smaller CDFIs,” says Lee. “The program started during Hurricane Sandy, and that’s what helped us deploy capital so quickly in that crisis.”

Restoring CAP would help CDFIs reach more of the minority- and immigrant businesses that need help the most right now. Indeed, CDFIs are unique in their ability to deliver technical assistance and capital to support minority- and immigrant-owned businesses. They have the trust of these businesses, know how to reach them, and are adept at making small loans to entrepreneurs who aren’t yet able to access financing from traditional lenders.

“Almost all of our borrowers are minority- or woman-owned businesses; about half are Black-owned,” says Aron Kurlander, of the Greater Jamaica Development Corporation, a CDFI that provides small loans to businesses in southeastern Queens. “Our borrowers are harder to service for traditional banks. They have viable businesses but maybe haven’t developed a credit history yet. The loans we give aren’t long-term, but they tend to be critical for businesses who are waiting for a big invoice to be paid or looking to buy a new piece of equipment to expand their business.”

For Lily Sierra, CEO of the industrial cleaning company LN Pro Services LLC in Jamaica, CDFI financing helped her business grow and hire—and has continued to do so, even amid the pandemic. After learning about Greater Jamaica Development Corporation at a Queens Public Library event, she was able to apply for and receive a loan to cover new staff costs after winning her first contract with the MTA. “If I didn’t have that loan, I wouldn’t be working today,” she says. Sierra says she didn’t even bother approaching a bank. “I was new in the business without a lot of income and didn’t think I’d be a good candidate.”

When the pandemic hit and Governor Cuomo ordered more intensive cleaning on public transit, the MTA offered her a much larger contract—if she could hire another 250 or so employees quickly. Bridge financing from GJDC helped her cover expanded payroll costs before getting paid and enabled her company to grow by a multiple of ten.

CDFIs have stepped up enormously during the pandemic, providing invaluable technical assistance and playing vital roles in helping to connect immigrant- and minority-owned businesses to relief programs, including PPP loans, when the lack of established relationships with larger banks prevented so many of these businesses from doing so. With greater access to a tool like New York State’s loan loss reserve program, they would be able to help many more.

Pennsylvania offers an alternative example of how a new level of state support for CDFIs is benefiting historically underserved small businesses. With its allocation from the CARES Act, the commonwealth has provided $225 million to its network of CDFIs to support small businesses in the form of direct grants, expanded lending, and relief of existing debt. CDFIs received direct funding to expand their outreach and support of small businesses, as well as to lower the cost of borrowing for their small business clients, with $100 million earmarked for Historically Disadvantaged Businesses.5 By allocating this funding through the state’s CDFIs, Pennsylvania is aiming to reach more of the small businesses that have struggled to access earlier rounds of relief in the immediate future, while expanding the ability of CDFIs to make more low-cost loans over the long term.

6. Waive all non-life-threatening small business fines for a full year and refund fines and fees incurred since the pandemic hit

The mayor and the City Council should waive all city-administered, non-life-threatening small business fines and fees for one full year, putting millions of dollars back into the pockets of struggling small business owners. This moratorium should apply to the full range of fines levied on small businesses—including those issued by the Department of Consumer Affairs and Worker Protection, the Department of Buildings, the Department of Sanitation, the Department of Transportation, and the Health Department—with small exceptions only for violations that directly threaten health and safety. This plan can have the greatest impact stabilizing struggling small businesses by waiving or refunding penalties already paid since the pandemic hit while extending a blanket moratorium on all non-life-threatening fines for a full year. City leaders should also work with the State Legislature to implement a similar moratorium on state-administered fines, including those issued by the State Liquor Authority and the Department of State.

Even as small businesses cope with massive revenue declines and a host of new expenses—from personal protective equipment and HVAC upgrades to infrastructure for outdoor dining and rising labor costs—city and state government continue to impose fines and fees on business owners at a time when few can afford these additional costs. By waiving these fines for a full year—and refunding fines accrued since the pandemic hit—government can effectively put money back in the pockets of hard-hit small business owners while most are still awash in red ink.

New York’s dizzying array of small business rules and regulations result in millions of dollars in fines and fees each year. In fact, just two city agencies—the Department of Consumer Affairs and Worker Protection and the Department of Sanitation—issued more than $70.1 million in fines to businesses in 2019 alone. Even during the pandemic, the city has continued to issue millions of dollars in fines to small businesses. For instance, the Department of Health and Mental Hygiene collected about $8.4 million in fines from July to October of 2020.

While some of these fines are for urgent concerns—for instance, evidence of a major health hazard or life-threatening working conditions—the vast majority are for far more minor issues: a dirty sidewalk, a missing price tag, or an improperly displayed condiment station. And while most fines are for just a few hundred dollars, these penalties take a major toll on businesses that are already struggling for survival.

“Mixing clean hand towels and clean smocks—that’s a fine. Not having a business license on the wall, even if it’s in a nearby drawer—that’s a fine. Not having the updated sticker from your carting company—that’s a fine, too. There’s even a fine for having hair on the floor at a barber shop,” says Carol Thomas, the owner of a hair salon in Fort Greene. “We run a tight ship, but even I’ve had my share.”

A major city effort to end most fines for the next year would save the average small business hundreds if not thousands of dollars, even as most businesses remain a long way from pre-pandemic sales figures. For many businesses, the challenges of the past year are far from over: many owe thousands in accruing back expenses—from rent and utilities to insurance and inventory—and thousands could soon be at risk of eviction. Given the precarity of this moment, anything government can do to keep money in small businesses’ bank accounts can help lengthen the runway of business survival until a stronger economy reemerges.

In addition to the one-year moratorium and refunds for pandemic-issued violations, city leaders—starting with the mayor—should lay out a vision for changing the purpose and culture of city agency inspections from revenue generation to problem mitigation.

“There should be a blanket cure period of any violation that isn’t an immediate danger to someone’s life or safety,” says former Small Business Services Commissioner Gregg Bishop, referring to the process that allows business owners to fix problems uncovered during inspections without incurring fines. “The challenge is that that will be a drop in revenue for the city, which it relies on to fund some of its programs.”

That dynamic is apparent to many of the city’s small business owners. “It feels like a revenue-generating process,” says Samantha Champagnie, owner of two Golden Krust Caribbean restaurant franchises in Downtown Jamaica, of the periodic health inspections her businesses receive. “Even when you pass, you wind up having to pay for something small. It’s pretty nerve-wracking.”

In addition to a year-long moratorium on non-life-threatening fines, the city should finally move forward with plans to make far more violations automatically curable—a policy that allows business owners to correct certain violations within a set time period, usually 30 days, without incurring any fines. The de Blasio administration has made important progress on this approach in recent years, but the list of curable violations should be expanded to cover a much larger range of fines. The city can start by making an additional 77 violations permanently curable, as proposed by the mayor in February 2020—a helpful idea that has unfortunately languished for more than a year. Making these additional violations curable—including, among others, sidewalk cleaning violations from the Department of Sanitation, signage violations from the Departments of Buildings, and noise violations from the Department of Environmental Protection—could help reduce the burden on small businesses for the long term, while still ensuring that quality of life concerns are adequately addressed.

7. Establish a Small Business Digital Acceleration Fund to support implementation and optimization of digital tools

The pandemic has made clear that most, if not all, of New York’s small businesses are going to need to adopt technology tools and embrace digital platforms—from Instagram to Shopify—to strengthen their businesses and stay competitive in the future. But city economic development officials shouldn’t just support more workshops and webinars that raise awareness of technology options and platforms and encourage entrepreneurs to try them. The city should also create a fund dedicated to helping small businesses take the next big step: implementing—and optimizing—those digital tools.

“Most businesses that need digital help need hand-holding through every step of the process,” says Samara Karasyk, executive vice president of the Brooklyn Chamber of Commerce, one of the organizations supporting the Small Business Resource Network, an initiative to help small businesses without a web presence to get online with basic webpages and web hosting for a year. “It’s not enough to provide the financial support. They really need help with implementation, or it just won’t get done. It’s too daunting for most of them with everything else they’re worried about.”

New York City already offers programming aimed at introducing business owners to digital tools, such as one-off sessions on email marketing or search engine optimization provided by the NYC Department of Small Business Services. But busy entrepreneurs need more than a group workshop; they need one-on-one guidance on selecting the right tool and platform for their needs, integrating that tool into their business operations, tracking the results, and making adjustments over time to maximize revenues and meet other goals.

“Most of the businesses I work with are not going to go back after I sit with them and do social media,” says Gina Ramcharan of The Lillian Project. “But nor can their business afford to shell out what it can cost to implement it. Some underwriting of those expenses would help.”

8. Help BIDs use existing resources to support struggling businesses by lifting the 30 percent cap on subcontracting

The City Council could free up more resources to help small businesses in small and mid-sized business districts citywide by eliminating or amending the rule that prevents BIDs and other local economic development organizations from using more than 30 percent of their discretionary Council funding on subcontractors. Though perhaps well-intended, there is widespread agreement among local economic development leaders across the city that the 30 percent cap is a “nightmare” that ties the hands of the smallest organizations and makes it harder for them to spend resources in ways that bolster local merchants and improve the business climate.

“I hired a marketing consultant to meet with businesses one-on-one and help them with all the challenging issues they are facing now around digital marketing,” says the executive director of a small BID operating outside of Manhattan. “We didn’t have that expertise on staff. But because I could only pay the consultant 30 percent of our allocation, she was only able to work with 6 or 7 businesses. It’s a totally artificial barrier, and because of it, we can’t provide enough support to businesses as we need or want to.”

“I received discretionary funding from the Council’s Clean NYC Initiative, but we can use only 30 percent of that on a subcontractor,” says the head of another organization. “So if we receive $20,000, we can only use $7,000 for people who can clean the streets. It makes no sense.”

There are undoubtedly more pressing issues facing the city’s small businesses than this minor bureaucratic hurdle. But at a time when there is a clear need to help far more of the city’s small businesses become stronger and more sustainable, it’s an easy fix for the Council to amend a misguided contracting requirement and ensure more city resources can be put to use quickly and effectively to support small businesses.

“This is something the city should change,” says another BID director. “If the purpose is for supporting businesses like helping companies shift to e-commerce, or training them for something that will improve the business, the city should waive that restriction and let us actually spend the dollars that are allocated to us.”

9. Require new regulatory legislation to include a small business economic impact evaluation

Over the past several years, new regulations and mandates have added to the already high cost of operating a business in New York City. These changes—from mandatory paid sick leave to a $15 per hour minimum wage—have provided strong new supports to workers but have also taken a significant toll on the finances of many small businesses. Our research suggests that for businesses operating with the thinnest margins, including a disproportionate share of immigrant- and minority-run businesses, these costs have been the most destabilizing. Higher operating expenses have reduced small businesses’ cash reserves, weakening their ability to withstand an economic shock, and led some small business owners to question whether they could afford to remain in the city—even before the pandemic hit.

“A lot of the business owners we interact with are on pins and needles,” says Isa Abdur-Rahman, who leads the Farmers Boulevard Community Development Corporation. “It’s very hard for anyone to make real investment in such an uncertain environment. One way to help allay those fears is by looking for pain points [in regulatory legislation] that would be particularly burdensome for small businesses.”

To help identify and address these concerns in the future, the City Council should start by passing a law requiring new regulatory legislation to include a small business economic impact evaluation. Similar to the regulatory flexibility analysis required of all federal agencies, this law would require the city to analyze the impact of proposed regulatory actions on small businesses and to seek less burdensome alternatives when the impact is likely to be significant.

This approach would not only better inform policymakers of the potential consequences of new regulations, but also help generate ideas to minimize unintended economic consequences and support implementation and compliance. “If there is an impact on small business, what can the city do to help small business implement new requirements?” asks Jennifer Tausig, executive director of the Jerome Gun Hill BID. “An economic impact statement is a good place to start.”

10. Sign legislation making NYC bars, restaurants, and venues eligible for temporary liquor licenses

By signing into law a newly passed bill granting New York City businesses the right to begin serving alcohol with a temporary liquor license, New York’s governor can significantly shorten the time it takes for entrepreneurs to open a new restaurant or bar in New York City. The new legislation would grant New York City businesses the same opportunity restaurants and bars have in the 57 other counties of New York State, helping new businesses in the city generate sales a lot sooner and greatly increase their likelihood of
success.

A temporary license can be obtained in as little as six weeks, but at the moment, with the agency’s current backlog, the review necessary for a full license is taking the better part of a year.

“I can open up in Westchester County in a month-and-a-half, but it takes me nine months across the street in the Bronx,” laments Michael Brady of the HUB Third Avenue BID and owner of a forthcoming bar in the Bronx. “No one knows exactly why, but in the five boroughs, applicants must wait until a full license is granted by SLA before they can begin serving.”

Cutting the time to get a liquor license from six to nine months to under two months could mean tens if not hundreds of thousands of dollars in extra sales and profits for business owners.

“Opening up with a temporary license is done as a matter of course throughout the rest of the state. We need to do whatever we can to help new businesses to open fast. They cannot be waiting months for a liquor license,” says Andrew Rigie, executive director of the New York City Hospitality Alliance. In June, the state legislature passed a bill that would allow for temporary licenses in New York City, but it awaits the governor’s signature. Rigie is hopeful the bill can become law and help new businesses open more quickly. “I’m cautiously optimistic. But it’s not done until it’s done.”

Conclusion: Acting Now to Ensure an Equitable, Long-Term Small Business Recovery

As New York City enters a summer of renewed optimism about the city’s economic future, the state of the city’s small businesses remains highly uncertain. A return of customers and a corresponding uptick in revenues continues to be overshadowed by the mountain of debts and new costs that many business owners have accrued—from back rent, unpaid utilities, and vendor invoices to PPE costs, outdoor dining setups, and increased staffing expenses. These challenges are compounded in many of the city’s lower-income communities of color, where high rates of unemployment, lower rates of vaccination, and a lack of small business support infrastructure are making the road to recovery that much steeper.

To spur a full, equitable, and sustainable recovery for the city’s vital small businesses, city and state leaders will have to go beyond immediate relief measures. The 10 practical and road-tested ideas in this report are designed to do just that by strengthening community-level infrastructure to support small business recovery and growth and by taking specific steps to spark a new wave of business formation in communities of color. Taken together, these two approaches can help address the uneven—and unequal—small business recovery currently playing out across all five boroughs, clear the barriers to new business formation that disproportionately restrict aspiring entrepreneurs from lower-income communities, and ensure that New York City learns from the alarming vulnerabilities present before the pandemic in order to lay a stronger foundation for small business success in the future.

 


Endnotes

  1. Center for an Urban Future analysis of data from the U.S. Census Bureau’s 2017 Annual Business Survey, the most recent year for which this data is available. The average white-owned employer business in New York City generated $2.75 million in revenue, compared to just $1.2 million for the average minority-owned employer business.
  2. Center for an Urban Future analysis of data from the Department of Consumer Affairs.
  3. Data from the 2021 Preliminary Mayor’s Management Report.
  4. Data from the City University of New York, Current Student Data Book, 2019–2020.
  5. Pennsylvania Department of Community and Economic Development, “COVID-19 Relief Statewide Small Business Assistance,” https://dced.pa.gov/programs/covid-19-relief-statewide-small-business-assistance

This report is made possible by JPMorgan Chase.