It’s never been easy to run a small business in New York City. The city’s entrepreneurs have long faced dizzying odds: high rents and high taxes, byzantine restrictions from City Hall and fierce competition from corporate big-box stores as well as the bodega next door.
And that was without the coronavirus pandemic.
Between March and July alone, more than 2,800 small businesses in New York permanently closed. By November, revenue from small business in the city had fallen by more than half since January. The Partnership for New York City, a business group, said New York’s 236,000 small businesses employ roughly 1.3 million people. The group has estimated that one-third of small businesses might never reopen. Though it’s a grim figure, roughly 20 percent of small businesses fail in their first year, even in a healthy economy, suggesting that a decline in new business creation may also be playing a role this year.
Across New York, the landscape of shuttered storefronts is gutting. Thousands of jobs have been lost, adding to the collective grief of a city where more than 24,000 people have died from Covid-19, and the lives of millions more have been upended.
Helping small businesses get back on their feet is essential work.
What would New York be without its bakeries and its bodegas? Its flower districts, and fish markets and shoe-repair shops? Its falafel stands and taco trucks, its tiny restaurants filling the streets with sweet aromas from every corner of the world? A recovery without small business is unimaginable.
The surest way to help these businesses survive right now is by giving them direct federal aid and access to inexpensive capital.
New York, like most state and local governments, doesn’t have those kinds of funds. But the city can step up now to help small businesses cut through onerous red tape to gain access to roughly $134 billion in untapped federal stimulus money. Ideally, that effort would begin with businesses owned by minorities, immigrants and women, which are already at a disadvantage in securing investment and are likelier to serve communities that have been hardest hit by the pandemic.
Comptroller Scott Stringer’s August report on small business recovery is filled with good ideas, like simplifying licensing requirements for such businesses by allowing owners to file paperwork with a single point of contact and making it easier to obtain liquor licenses. Mr. Stringer and others have encouraged the city to help small businesses establish an online presence to compete with large retailers like Amazon.
Some of those efforts are already underway. Cinch Market, a Brooklyn start-up gaining popularity, is offering same-day delivery from scores of local retailers.
In September, the city teamed up with the Partnership for New York City, the Peter G. Peterson Foundation, borough chambers of commerce and other entities to start a support network to connect small business owners with vital resources like legal and accounting services.
To become a truly small-business-friendly city, though, New York will need to go big.
Rethinking the city’s approach to development, pandemic or not, may be a good place to begin. One way is to house small businesses alongside much larger ones, allowing the larger tenant to shoulder a greater burden of the rent, much like market-rate tenants do in many affordable housing buildings. Essex Crossing, a mixed-use development on the Lower East Side, offers a glimpse at what that might look like. That development includes a Trader Joe’s grocery store, as well as a Target. But it offers lower rent to smaller businesses, and is also home to neighborhood joints like Veselka, the classic New York Ukrainian restaurant, and Tortilleria Nixtamal, a beloved Mexican restaurant originally from Queens.
But that’s just a first step to addressing New York’s notoriously high commercial rents. One thing the state can do is ban the common New York practice of requiring minimum rents for commercial mortgages, which keeps too many properties vacant even when an owner is willing to accept lower rents.
Another idea? Adopting government disincentives against keeping properties vacant for long periods of time. One bill, introduced by State Senator Brad Hoylman, would allow New York City to collect taxes on storefronts that have been vacant for at least six months. In some parts of the city, particularly outside of Manhattan, this may be more punitive than helpful. But in wealthier areas of the city where some owners are content to keep a storefront empty until they can get top dollar again, it may prove useful.
In the darkest days of the pandemic this year, it was New York’s small businesses — its coffee shops and restaurants, groceries and bakeries — that remained open, serving up comfort and normalcy to millions who sorely needed them. Now they need our help in return.