Report Finds NYC’S Small Businesses Need Cash and Targeted Programs Now
As New York City begins its economic recovery from the COVID-19 pandemic, a new report from Columbia University’s School of International and Public Affairs (SIPA) and Department of Biomedical Informatics identifies policies for successfully rebuilding the City’s small businesses, which before March 2020 numbered more than 220,000, employing more than 3 million people and accounting for more than half of private-sector jobs in New York City.
Researchers developed and distributed the Communities Speak: Small Business Survey in October and November 2020 with support from a working group of nonprofit and civic organizations, business improvement districts (BIDs), and city agencies. New York City small businesses—defined as independently owned businesses with 100 employees or fewer—were surveyed to determine the impact of the pandemic on their finances and staffing and to identify a path back to economic viability. Their responses document the severity of COVID’s impact on New York’s small businesses, the specific problems small business owners have been confronting as a consequence of the early lockdown, the efforts by many small business owners to stay open; and what businesses ultimately need to become, once again, economically viable.
The report, entitled Communities Speak: Rebuilding NYC Small Business After the Pandemic, makes clear that New York City’s small businesses are resilient and can meet their current challenges as long as City government policy reflects their expressed, specific, and unique needs.
The report’s key findings are:
- Almost all small businesses faced significant challenges to their economic viability as a consequence of the pandemic in the form of significant revenue loss, staff reduction and a loss of clients and customers.
- A significant percent (76 percent) of non-restaurant small businesses that closed during lockdown had total revenue loss.
- During lockdown, 35 percent of small businesses closed.
- During phased reopening, only 14 percent reopened fully, while 72 percent opened at limited capacity.
- Restaurants faced greater challenges than other small businesses during lockdown and the phased reopening period.
- No restaurants were able to stay fully open during lockdown.
- Approximately 20 percent of non-restaurant small businesses reopened fully after lockdown ended. When restaurants reopened, it was more likely to be with more limited capacity (less than 50 percent) compared to other small businesses (above 50 percent capacity).
- The cumulative impact of lockdown and phased reopening regulations are clearly visible in the significant loss of restaurant revenue and the number of laid off or furloughed employees.
- Restaurant owners furloughed, reduced hours, and laid off employees at higher rates than other types of small business owners.
- Restaurants were more likely to receive rental or financial assistance than other small businesses.
- Most of the BID small businesses surveyed were located in commercial or mixed-use zoning districts and were hit hard by the COVID shutdown. They appear to have had a similar experience to other small businesses and have similar needs.
- Minority and Women-Owned Business Enterprises (M/WBE) reported a different experience than other small businesses during lockdown. Fewer M/WBEs reported closing compared to other small businesses, but they stayed open with limited capacity or with a different business model. Rental assistance was less common for M/WBEs than other small businesses.
- M/WBEs and other small businesses were likely to receive some form of financial assistance. However, financial assistance to M/WBEs was mostly at lower levels.
- Technology small businesses were more likely to remain open and fiscally stable and some even increased their revenue during lockdown by changing their business model and continuing to work remotely.
- The most important immediate needs identified by small businesses was by far cash flow or loan assistance (63 percent) and rental assistance was second (48 percent).
- When it comes to identifying needs, restaurants tend to speak in one voice. Restaurants identified rental assistance as their greatest need (73 percent), but cash flow and loan assistance were identified by nearly the same percentage of restaurants (71 percent).
- The largest percentage of M/WBEs also identified cash flow assistance as their greatest need (61 percent), but there was a significant percentage that also needed rent help and compliance assistance.
- Tech small businesses are significantly different than other businesses. While they need cash flow and rental assistance, it is not at the same rate as other business.
Read the full report, including policy recommendations at Columbia SIPA.