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State

‘I don’t think this is sustainable’: Small businesses describe struggles at NYS legislative hearing

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New York State Legislature
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Jeff Knauss, CEO of Syracuse-based Digital Hyve, testifies before the New York State Legislature Wednesday during a virtual public hearing about COVID-19's impact on small businesses.

The New York State legislature on Wednesday took one of its first official actions since passing a state budget over a month ago. They held a public hearing — remotely — on the impacts of the COVID-19 pandemic on small businesses, and how the federal government has responded.

 

The hearing began with a moment of silence for the over 22,000 New Yorkers who have died from the disease. Two of the Senators who participated in the hearing, Democrat James Skoufis from the Hudson Valley and Republican James Seward of Oneonta, had COVID-19 and recovered.

 

Small business owners, including restaurateur Carlos Suarez, testified about the struggles they have endured to get federal aid, including the Paycheck Protection Program or PPP loans, and other loans through the federal Small Business Administration.

 

Suarez said the federal government’s response can be summed up in three words: “Chaotic, flawed, and inadequate.”

 

Suarez had four thriving eateries in Manhattan’s Greenwich Village. They tried initially offering take out service, but are now closed and most staff have been furloughed.  

 

He said he received the PPP loan, but it expires in four weeks. He’d like to see it extended to 24 weeks and would like a longer period to have to pay it back. Currently, loan recipients have a six-month grace period and then are required to pay back the loan over a two-year period. He said otherwise, he and other owners in the financially devastated restaurant industry will be even further in debt.

 

“It’s fiscal suicide,” Suarez said.   

 

Natasha Amott runs Whisk, a kitchen accessory shop in downtown Brooklyn. She also received a PPP loan on the second round, but said the program is fundamentally flawed.

 

When it was designed, it was assumed that many businesses would stay open, if at reduced level of sales, and that the economy would be fully back open by the end of June. The loan is forgiven entirely if the business owner retains employees and uses 75% of the loan for payroll. However, Amott said retail shops like hers were ordered closed and she had to furlough most of her workers.

 

She said she’s converted her business to online sales, but it’s expensive and inefficient.

 

“It is so costly,” Amott added. “There are inevitably problems with shipping, with USPS or FedEx.”

 

Amott said when it comes time to reopen and rehire her workers, some of them may not want to come back right away. The federal CARES act provides an additional $600 a week in unemployment insurance, in addition to state unemployment benefits. She said some of them are making more money from the two programs than they could if they returned to work.

 

“And if we are not fully operational by the end of June, they will be facing furlough again,” Amott said.

 

Lawmakers also heard from two upstate businesses, who are also facing challenges.

 

Jeff Knauss is the CEO of Syracuse-based Digital Hyve. It helps other small businesses navigate marketing on social media. He said the company planned to expand to Rochester and Buffalo this year, but with growth projections now 66% below what they originally planned, those plans have come to a “grinding halt.” 

 

“Many of our clients were deemed nonessential, such as car dealerships, casinos and small property owners,” Knauss said, “and stop spending money on advertising.”  

 

He obtained a PPP loan, which he called a life saver, and has been able to retain his staff. But he also said the loan needs to extend for a longer period of time. He expects his business to continue to operate at a fraction of its former rate and anticipates that his staff may work at home until 2021.

 

Robert Stack, with CJS architects in Buffalo, also said the PPP loan was vital to the firm.  He tried to get additional loans from the SBA, but never heard back from the agency. Because architects work with construction firms, he could be allowed to reopen sooner than the other small business owners. The first phase of regional openings outlined in the state’s plan include construction and manufacturing. Stack said it can’t come soon enough.

 

“I don’t think this is sustainable,” he said.

 

Western New York has not yet been authorized to begin reopening.

 

The small business owners said there are several things that state lawmakers can help them with. First, they need access to personal protective gear for their employees when they do begin to reopen. Amott and the others said it’s been hard to locate masks and hand sanitizer.  

 

“It’s just exhausting,” she said. “I’m living on barely any sleep.”

 

They would also like unemployment insurance rules to be changed. Currently, the rate a business pays is based on how many workers it has recently laid off. They say they should not be penalized with higher rates because they furloughed workers after shut down orders. 

 

They also say they need help meeting rent. Reduced business activity over the next several months will leave them little money to pay to commercial landlords. They would also like to see their payroll taxes lowered, and finally, they want the state government to encourage shopping at local businesses. They say otherwise, Amazon and the big box stores may squeeze them out altogether.