Restaurants and shops that fell behind on their rent and other expenses during the COVID-19 pandemic will soon be able to apply for additional grants.
New York’s new state budget includes $800 million in direct cash assistance for small businesses. State Assemblyman Harvey Epstein of Manhattan, who had been lobbying for the aid said the package sets priorities: businesses with 100 or fewer employees; those with 10 or fewer; and those owned by women and minorities.
“So everyone should apply, but people who are small are going to get a leg up,” he explained. “It's not going to cover everyone's rent payment across the state. But I think we will see a lot of people getting a lot of assistance for rent, taxes, utilities.”
Epstein said businesses will have to demonstrate they lost at least 40 percent of their income, by comparing their revenues in 2020 to 2019. Empire State Development will be in charge of the program and will write the rules within the next few weeks. He said the goal is to ensure money is distributed promptly, unlike the fund for rent relief.
State Budget Director Robert Mujica said the state is using some of the $5 billion for business relief it just received from the latest federal stimulus, to help small businesses that either weren’t eligible or didn’t receive as much federal aid as they needed in previous packages.
“The main goal of the program is to get people back to work,” he said Wednesday, at a press conference with Governor Andrew Cuomo. “It’s to make sure we can get those businesses going so they can re-employ and bring the unemployment rate back down, and deal with missing payments, rent payments they have not been able to make.”
Small businesses had been lobbying Albany for legislation called Save Our Storefronts, worth $500 million specifically for restaurants and shops with 25 or fewer full-time equivalent employees. It would have also required participating landlords to reduce their monthly rent by 20%. But the Real Estate Board of New York considered it overly complicated, and didn’t see a need to modify leases.
The final budget scrapped the proposed rent reductions. But Chris LaCass, an organizer with Save Our Storefronts, called the $800 million package “huge.”
“It shows that we can do these big things, we can actually fight against the lobbyists and the special interests that have held New York captive, politically.”
Nonetheless, he questioned why businesses with up to 100 employees could apply for aid. His coalition wanted to help those with 25 or fewer for a reason.
“Most of those businesses over 50 employees got everything,” he said. “They have the lawyers, they have the accountants who can put together an application package within 48 hours of the rules being known.
“Small businesses, mom and pop shops, women who are single mothers who own a business, they don’t have the capacity to turn something around that quickly,” he explained, noting there are also immigrant business owners who may not speak English or know who to consult.
Epstein said he also wanted a more stringent definition of small business, and said he will encourage the Empire State Development Corporation to give priority to the smallest ones that need more assistance. He’s also telling business owners to contact their local state lawmakers and the city’s small business programs for help with their applications.
Tony Son, owner of Unit Cleaners in Jackson Heights, Queens estimates he lost half his business after the pandemic struck, because people aren’t dressing for work in their offices anymore. He said he pays his landlord whatever he can afford each month.
“Whenever I have money I pay to the landlord and the landlord is just waiting for the full payment but I cannot pay the full payment,” he said. The additional aid would help him, but he thinks lawmakers and landlords should work out a longer- term strategy because businesses like his own will continue to struggle this year.
“Even if they give me $10,000 that’s just two months’ rent,” he said.
Linda Pagan, owner of The Hat Shop in SoHo, agrees it’s going to take more than money to pay old bills to get her business back on track. She estimates she owes $47,000 in back rent.
“I also need to renegotiate my lease, my rent,” she explained. “The landscape has changed drastically. Forget about people coming back into the neighborhood. People are not going to be working or shopping the way they were before the pandemic.”
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In addition to $800 million in cash relief for small businesses, the state budget contains another $200 million in total for restaurants and arts organizations. This latter piece includes $25 million in grant funding to support restaurants that provide meals to distressed and under-represented communities, $40 million for arts and cultural nonprofit organizations, $35 million in tax credits for hard-hit restaurants, and up to $100 million in tax credits to jump start tourism activity in New York City.
And there’s $100 million for another type of business: distressed hotels. This fund would enable the state to purchase hotels and turn them over to non-profit developers, who can then build supportive, affordable housing for people in need. The program is only for New York City and does not include the main commercial business districts of Manhattan.
Deputy State Senate Leader Michael Gianaris, of Queens, estimated there are dozens of hotels that couldn’t pay their mortgages and rent, because they lost so much tourism during the COVID-19 pandemic. But their buildings could be used to help solve the city’s housing crisis.
“The notion of marrying those two needs is a very elegant way of solving both of those problems,” he said.
But Vijay Dandapani, president of the Hotel Association of New York City, sounded skeptical about how much good the program could do with only $100 million.
“Even in Long Island City, a 100- room hotel probably costs the owner including land somewhere around $25-30 million to do. At that number, you're talking four hotels if you’re lucky. So four hotels, 400 rooms. That’s not insignificant but it’s not huge.”
Gianaris said he originally sought for $250 million and hopes the state and federal government will eventually add to the program. “It’s a starting point,’ he said.