New York Businesses Affected By Sandy Need Equity, Not Debt
New York Businesses Affected By Sandy Need Equity, Not Debt
Weeks after Hurricane Sandy hit in October, many small business owners are 
still reeling from the shock. Some owners who lost everything are wondering if they will ever be able to rebuild their businesses. Others, while grateful their businesses were not flooded, are struggling with having to write off a month with almost no revenue.
BCNA Client Marina Novoprutskaya was just barely able to get her small animals to safety when her Brighton Beach business, White Poodle Pet & Grooming, was flooded and destroyed. She lost everything: equipment, furniture, and infrastructure.
Mohammed Barrie experienced a drastic reduction in income at his car service base during the gas shortages. The taxis and limo drivers upon whom he depends for income were spending hours and hours in line for gas; because the drivers lost business and income, he lost income too.
Hui Lin Wu saw a severe reduction of business from downtown clients at her Chinatown salon, Red Sun Beauty Skin Care. While she suffered no physical losses, the loss of income for several weeks was enough to deplete her cash flow.
While city, state or federal agencies have responded, one thing we’ve found as we’ve helped clients contact disaster relief resources is that representatives are often unsure about what aid small and micro business owners qualify for and how to help them apply.
At BCNA, we are very pleased that we have been able to assist our clients with emergency loans to tide them over. We have disbursed over 30 emergency cash flow loans of $5000 (with over 30 requests still pending) including one to Marina Novoprutskaya, who has not received any loans or grants from city, state or federal programs.
But while emergency loans are better than nothing, ultimately what they do is to create new debt for their recipients.
We believe that a more effective way to help the recovery effort would be to create a match program similar to Individual Development Account (IDA) Programs. Because the last thing that many of these small businesses need is more debt, a match grant of up to $25,000 would not only provide recovery funds but also much needed psychological encouragement.
I have seen first hand the benefits of BCNA’s IDA Program for Refugees, which is a match program funded by the Office of Refugee Resettlement (ORR). The program has granted over $4 million for micro-businesses, first home purchases, and further education for low income refugees living in New York City. Of the clients participating, 85 were able to use that equity to buy their first home; 60 for education, re-certification, & training (resulting in income increasing 50% to 100%); and nearly 500 invested the match grants in their micro enterprises, resulting in the creation of 250 new jobs and retention of over 600 jobs.
Creating IDA-style match programs for disaster victims is definitely something to think about – and plan for – for future large scale challenges like Sandy.
Here are some local resources for small businesses:
NYC’s Business Solution Centers have a comprehensive list of disaster relief resources, the majority which are providing relief in the form of loans.
For Manhattan businesses located below Chambers Street, the Alliance for Downtown New York has a Back to Business Grant program providing up to $20,000. For applications and information about other programs for downtown Manhattan businesses click here.