Though small businesses across the country have been battered by the pandemic, New York City businesses have been hit especially hard. Not only was the city the pandemic's epicenter when it first broke out, but many residents have staged an exodus from the city, taking up residence in the suburbs instead. Plus, with so many people working remotely, many businesses just aren't seeing the foot traffic they're used to.
The result? Small-business closures could explode in the near term in the absence of aid. If that were to happen, New York City real estate investors would be in for a blow. Not only would property values decline, but commercial property owners would face untold vacancies and a significant drop in rental revenue.
Thankfully, though, there is relief on the way. And it could be enough to prevent a massive wave of small-business closures.
Small businesses get a lifeline
Restaurants and other small businesses that have struggled during the pandemic will soon be allowed to apply for additional grants that could save them from shuttering. New York’s new state budget includes $800 million in direct cash assistance for small businesses, and those with a smaller number of employees (10 or fewer) will be prioritized, as will those owned by women and minorities. To qualify for one of these grants, businesses must prove that they lost at least 40% of their income in 2020 compared to 2019.
New York is using some of the $5 billion for small business relief it just received from the recently signed $1.9 trillion American Rescue Plan to give out this aid locally. In addition to the $800 million for small businesses, the state budget also contains $200 million for restaurants and arts organizations. This includes $25 million in grant funding to support restaurants that provide meals to underserved communities, $40 million for arts and cultural nonprofits, $35 million in tax credits for restaurants, and up to $100 million in tax credits to help promote tourism activity in New York City.
Hotels are in line for relief, too. In fact, there's $100 million on the table for distressed hotels. The catch, however, is that money is to be used for the state to purchase these hotels and turn them over to nonprofit developers, who can in turn convert them to affordable housing. Given the city's shortage of such units, that helps solve a dual crisis: It bails out hotels that aren't sustainable and gives low-income city residents a roof over their heads.
An important step in the right direction
Saving small businesses is vital to New York City's overall recovery, so the fact that there's a large chunk of money allocated for this purpose is a very good thing. It's also a positive thing that money is being given out to ramp up tourism, because once more people start visiting the city again, small businesses should see an uptick in foot traffic.
Of course, some small businesses may inevitably fold even with additional aid coming their way. But this batch of financial relief should give New York City real estate investors one reason to breathe a bit more easily, especially at a time when nightlife is slowly but surely beginning to open back up and employers are making plans to have workers return to the office. In fact, there's a good chance that in the course of the latter part of 2021, things in New York City will take a notable turn for the positive, and this round of relief will no doubt play a pivotal role in making that happen.