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How is it that a city program meant to give financial assistance to small businesses in the early days of the pandemic disproportionately benefited companies based in Manhattan while sidelining those in the Bronx?
The City Comptroller’s Office is still scratching his head after the recent release of a report detailing results of an audit.
“It’s kind of depressing,” City Comptroller Brad Lander said in an interview. “I don’t think it was in any way the intention of the Department of Small Business Services (which administered the program), but Manhattan small businesses were significantly overserved and Bronx small businesses in particular were really significantly underserved.”
Although the Bronx accounts for just under 8% of the city’s small businesses, the borough received just 2.2% of loans under the program, according to the report. At the same time, Manhattan businesses received 56.9% of loans although they make up 41.3% of the city’s small businesses. Applicants from Brooklyn secured 21.5% of the loans while Queens businesses received 15.8% and those from Staten Island 3.5%.
Josh J. Jameson, SBS deputy press secretary, issued a statement for the agency noting that it sprung quickly into action in March 2020, when neither the geographical nor industrial impact of the pandemic was known, making it “impossible to plan ahead for changes in eligibility requirements.” The statement continued: “Similarly, it would have been impossible to estimate where the pandemic would be most detrimental to small businesses and commercial corridors.”
The city agency distributed 3,411 grants and 404 loans to small businesses through a program that accepted applications between mid-March and early April 2020, just as the pandemic brought life in the city to a standstill. In total, $23 million in loans were provided to businesses and $25 million in grants.
Perhaps ironically, the just-released “New New York” business-recovery roadmap from Gov. Kathy Hochul and Mayor Eric Adams showed that some Bronx businesses districts have held their own in terms of bouncing back, despite the borough’s being shorted on COVID assistance. According to the “Making New York Work for Everyone” report, “virtually all of the city’s business districts outside of Midtown and Lower Manhattan have surpassed pre-pandemic consumer retail spending, including Midtown South (up 13%), Fordham Plaza (up 68%), The Bronx Hub (up 59%), Broadway Junction (up 55%), Long Island City (up 35%), Jamaica (up 21%), Flushing (up 11%), Downtown Brooklyn (up 20%), Forest Hills (up 19%), and DUMBO (up 17%).”
The SBA statement suggests other factors also come into play.
“It is important that anyone reading this Comptroller’s report also know that in a report issued earlier this year, this same office found that ‘While the net number of businesses in New York City as a whole declined during the two years, losses were disproportionally concentrated in Manhattan while the other boroughs saw growth or small declines.’”
Lander said that while the audit didn’t explain the disparities in funding support, it possibly reflects “a higher percentage of white small business owners versus a higher percentage of Latino and Black small business owners of color.”
Additionally, he reasoned that business owners in Manhattan had access to better networks.
“If you’ve got a real strong business improvement district or you’re tied in with a lot of other suppliers and they tell you, that’s one thing that’s really helpful,” he said.
The audit faulted the SBS for accepting applications “on a first-come, first-served basis rather than considering which neighborhoods were most adversely impacted by COVID-19, were historically underserved, or had more precarious economic activity.”
While acknowledging that the program was implemented rapidly in the middle of a crisis, Lander said the agency should have instead conducted outreach “to neighborhoods in which folks are least likely to apply.”
“That’s got to include language access,” he said. “And then second, build into the program application criteria that help make sure you get an equitable spread.”
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