September 11
Small Business Assistance Provided in Lower Manhattan in Response to the Terrorist Attacks Gao ID: GAO-03-88 November 1, 2002The attacks on the World Trade Center had a substantially negative impact on the New York City economy, severely affecting businesses. In the aftermath of the attacks, Congress, among other things, appropriated emergency supplemental funds to several federal agencies to aid and rebuild the affected areas. The Chairman of the House Committee on Small Business asked GAO to describe the assistance provided to small businesses that is funded from emergency supplemental appropriations of federal Community Development Block Grant funds and other sources.
To assist in New York City's recovery from the September 11, 2001, terrorist attacks, Congress appropriated $3.5 billion in Community Development Block Grant funding of which Congress earmarked at least $500 million to be used to compensate small businesses, nonprofit organizations, and individuals for their economic losses. One year after the attacks, these funds, administered in part by New York State's Empire State Development Corporation (Empire State), have provided $266 million to about 9,000 small businesses, many with fewer than 10 employees. Such assistance has included grants to compensate businesses for part of their economic losses--for both physical and economic injuries--and payments to attract and retain small businesses in efforts to revitalize the affected areas. Hundreds of millions of dollars remain available through these and other programs to assist an estimated 18,000 affected businesses. Empire State has employed mailings, visits, walk-in centers, and mass media to inform businesses of assistance programs. Other efforts by the Small Business Administration, New York City and State, banks, and nonprofit organizations have provided critical assistance to address the immediate and additional unmet needs of small businesses.
GAO-03-88, September 11: Small Business Assistance Provided in Lower Manhattan in Response to the Terrorist Attacks
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Report to the Chairman, Committee on Small Business, House of
Representatives:
United States General Accounting Office:
GAO:
November 2002:
September 11:
Small Business Assistance Provided in Lower Manhattan in Response to
the Terrorist Attacks:
GAO-03-88:
Contents:
Letter:
Results in Brief:
Background:
Empire State Uses CDBG Funding to Provide Various Types of Assistance
to Small Businesses:
SBA, New York City and State, Banks, and Nonprofit Organizations Have
Also Assisted Small Businesses:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Map of Lower Manhattan with Highlighted Empire
State Program Areas:
Tables:
Table 1: Information on Empire State Small Business Assistance Programs
Using CDBG Funding as of September 11, 2002:
Table 2: SBA Loans to Businesses in Lower Manhattan, as of September
11, 2002:
Table 3: Major Nongovernmental Business Assistance Programs, as of
September 11, 2002:
Figures:
Figure 1: Types of Businesses Receiving Business Recovery Grants:
Figure 2: Percentage of Business Recovery Grant Recipients, by Number
of Employees:
Figure 3: Annual Gross Revenues of Businesses Receiving Business
Recovery Grants:
Abbreviations:
BRG: Business Recovery Grant:
CDBG: Community Development Block Grant:
EIDL: Economic Injury Disaster Loans:
HUD: Department of Housing and Urban Development:
LMDC: Lower Manhattan Development Corporation:
SBA: Small Business Administration:
SBDC: Small Business Development Center:
SFARG: Small Firm Attraction and Retention Grant:
STAR: Supplemental Terrorism Activity Relief:
November 1, 2002:
The Honorable Donald A. Manzullo
Chairman, Committee on Small Business
House of Representatives:
Dear Mr. Chairman:
The September 11, 2001, terrorist attacks on the World Trade Center had
a substantially negative impact on the New York City economy, strongly
affecting businesses, both large and small and as disparate as
financial services firms, travel agencies, and retail stores. Some
businesses were destroyed, some displaced, and still others could not
operate because of street closures and the lack of utilities. Many
small businesses still face a diminished client base and uncertainty
about the future redevelopment of the World Trade Center site.
In the aftermath of the attacks, Congress appropriated emergency
supplemental funds to various agencies to aid and rebuild the affected
areas. In particular, Congress made $3.5 billion in Department of
Housing and Urban Development‘s Community Development Block Grant
(CDBG) funds available to the Empire State Development Corporation
(Empire State) and its subsidiary, the Lower Manhattan Development
Corporation. Congress earmarked at least $500 million of that total to
compensate small businesses, nonprofits, and individuals located in
lower Manhattan for their economic losses.
This report responds to your request that we describe the types and
amounts of assistance provided to small businesses from (1) the CDBG
supplemental funding and (2) other sources of funds that have been made
available to rebuild or sustain small businesses in lower Manhattan.
To address these objectives, we met with officials and obtained data
from federal, state, city, and nonprofit organizations on the
assistance that they provided to small businesses in the aftermath of
the terrorist attacks. We also met with lower Manhattan small business
advocacy groups, whose directors were often small business owners, and
attended meetings in which members spoke about the impact of the
terrorist attacks on their businesses. In addition, we visited city and
state business recovery centers and a Small Business Development Center
and attended a chamber of commerce networking event in lower Manhattan.
See appendix I for a detailed description of our scope and methodology.
We conducted our work between April and September, 2002, in Washington,
D.C., and New York, New York, in accordance with generally accepted
government auditing standards.
Results in Brief:
Empire State, a New York State entity, designated by the Governor, has
taken the lead in providing business assistance using CDBG funds,
allocating $506 million for small business assistance. As of September
11, 2002, Empire State had disbursed $266 million in grants to lower
Manhattan businesses through its small business assistance
programs.[Footnote 1] Empire State‘s Business Recovery Grant Program
began providing assistance in mid-February 2002 and has provided grants
to 8,783 businesses to help compensate them for their economic losses.
About 75 percent of these businesses had fewer than 10 employees. In
addition, through its Small Firm Attraction and Retention Grant
Program, Empire State has provided grants to 246 businesses that have
demonstrated their commitment to remain in lower Manhattan by signing
long-term leases. Small businesses can receive assistance from both of
these programs, as well as other Empire State programs, as long as the
specific eligibility criteria are met for each program. Empire State
also recently increased the amount of compensation that is available to
eligible businesses--both businesses that already have received grants
and new applicants--from its Business Recovery Grant Program; the
expected additional grants are not yet fully reflected in Empire
State‘s disbursements. In addition, Empire State is starting programs
that provide funds to nonprofit organizations and other entities, which
in turn will provide technical assistance and low-interest loans to
small businesses. Apart from grant administration, Empire State
continues outreach to make more businesses aware of available
assistance. Moreover, the Lower Manhattan Development Corporation plans
to provide $200 million from its CDBG funds to Empire State for small
business assistance programs.
The CDBG assistance is part of a larger network of assistance that
other government, nonprofit, and private organizations are providing to
small businesses in lower Manhattan. New York City and State offered
grant assistance to small businesses within the first few months after
the terrorist attacks, disbursing $24 million to 4,722 businesses, and
continue to subsidize a program offering bridge loans to businesses
through participating banks and community-based lenders.[Footnote 2]
CDBG funds will be used to reimburse a portion of these costs; however,
neither the city nor the state has made a claim for reimbursement. In
addition, the Small Business Administration (SBA) began making loans to
eligible small businesses within days of the terrorist attacks. As of
September 11, 2002, SBA had approved 2,486 loans totaling $201 million
for businesses in lower Manhattan, of which it had disbursed $154
million. Several banks also have offered short-term, low-interest loans
to small businesses to tide them over until other resources became
available. Moreover, several nonprofit organizations, often funded by
donations and charitable groups, are providing assistance. The
September 11th Fund has committed $50 million in business assistance.
Although the nonprofits‘ programs have not reached as many businesses
or provided as much funding as the Empire State programs, they have
filled a need by providing early assistance and have targeted hard-to-
reach groups and businesses. For example, one organization operates in
the Chinese community and targets industry groups, such as garment
businesses and limousine drivers. In addition to financial assistance,
some of the nonprofit organizations offer businesses extensive
technical assistance, including future business planning and help with
completing financial documents.
We provided HUD, SBA, and Empire State with an opportunity to review
this report. They provided comments that were technical in nature,
which we have addressed in the report where appropriate.
Background:
Using CDBG funds to respond to disasters is not unprecedented; however,
the dollar amounts allocated for such purposes in the wake of the
terrorist attacks on New York City are the largest ever made through
the program. In the months following September 11, 2001, $3.5 billion
in emergency supplemental CDBG funding was made available for New York
City--more than the total CDBG funds provided nationwide for all major
disasters in the last 10 years.[Footnote 3] Congress appropriated $40
billion to the President for emergency expenses (Emergency Response
Fund) to respond to the terrorist attacks of September 11.[Footnote 4]
Emergency response funds available for transfer to the Department of
Housing and Urban Development (HUD) could be used for CDBG programs, as
authorized by title I of the Housing and Community Development Act of
1974, as amended.[Footnote 5] Specifically, on November 1, 2001, the
Office of Management and Budget designated $700 million for CDBG
funding for New York City out of the Emergency Response Fund that
Congress had appropriated. On January 10, 2002, Congress appropriated
an additional $2 billion for CDBG funding, earmarking at least $500
million to compensate small businesses, nonprofit organizations, and
individuals for their economic losses.[Footnote 6] Finally, on August
2, 2002, Congress appropriated an additional $783 million for CDBG
funding.[Footnote 7]
Although the CDBG program‘s primary purpose is community development,
not disaster assistance, supplemental CDBG appropriations have been
made to provide recovery assistance from past natural disasters,
usually severe hurricanes, earthquakes, or floods. As in the aftermath
of natural disasters, HUD waived many requirements--such as assisting
persons of low and moderate income--of the general CDBG
program.[Footnote 8] HUD is one of many federal agencies that offer
disaster assistance, and HUD requires that its funds not be used to
duplicate benefits provided by other federal agencies, such as
SBA.[Footnote 9]
Empire State[Footnote 10] is the New York State entity designated by
the Governor to administer the first CDBG appropriation of $700
million. Created in 1968, Empire State is a corporate governmental
agency of the state of New York and is currently engaged in housing and
economic development and special projects throughout the state. To
carry out large-scale economic development activities, Empire State has
created various consolidated subsidiaries. In November 2001, the Empire
State board of directors authorized the creation of the Lower Manhattan
Development Corporation (LMDC) to assist in the economic recovery and
revitalization of lower Manhattan, with special emphasis on the
redevelopment of the areas damaged by the terrorist attacks. LMDC
functions as a joint city-state development corporation with a 16-
member board of directors that is appointed by the Governor and the
Mayor. For the amounts appropriated by Congress in the 2002 Emergency
Supplemental and the 2002 Supplemental previously noted, which totaled
$2.8 billion, LMDC was designated in the legislation as the entity to
develop programs and distribute assistance.
In its January 30, 2002, action plan, Empire State estimated that
almost 18,000 businesses in New York City, representing approximately
563,000 employees, were disrupted or forced to relocate as a result of
the terrorist attacks. Empire State estimated that businesses with 200
employees or fewer accounted for 99 percent of all affected businesses
and about 50 percent of all affected employees.[Footnote 11] As lead
agency in administering
federal assistance to New York City businesses, Empire State is
carrying out the action plan, which HUD approved, for providing $700
million in business assistance, with $506 million allocated for small
business programs. Additionally, LMDC has a HUD-approved action plan
for spending $306 million, primarily to provide residential retention
and attraction grants to individuals. LMDC also has made a proposed
action plan available for public comment that it will submit to HUD,
which would provide $350 million to Empire State for use in its
business assistance programs--$200 million of which would be used for
its small business programs. LMDC currently has issued no formal plans
for spending the remaining, approximately $2 billion in CDBG funding.
In addition to the assistance provided by government and private
organizations, qualifying small businesses can receive federal tax
benefits that have been made available for those affected by the
terrorist attacks. The tax benefits include expanded work opportunity
tax credits and special allowances for certain business property.
Businesses also may benefit from real estate tax abatement, commercial
rent tax exemptions or reductions, and energy discounts. These types of
assistance are not discussed in this report.
Empire State Uses CDBG Funding to Provide Various Types of Assistance
to Small Businesses:
From an allocation of $506 million, Empire State developed various
programs to assist small businesses. Empire State‘s Business Recovery
Grant (BRG) Program provides grants to businesses to compensate them
for economic loss, and its Small Firm Attraction and Retention Grant
(SFARG) Program provides incentives to remain in or relocate to lower
Manhattan. Empire State is implementing additional programs to provide
technical assistance and loans and also expects to reimburse other city
and state programs for their expenditures. Additionally, Empire State
has made and continues to make many efforts to reach out to affected
businesses. Table 1 contains information on the funding provided and
disbursed as of September 11, 2002, for each of the Empire State small
business assistance programs.
Table 1: Information on Empire State Small Business Assistance Programs
Using CDBG Funding as of September 11, 2002:
Dollars in millions.
Program: Business Recovery Grant; Total dollars allocated to program:
$331; Total dollars disbursed to businesses: $254; Total number of
businesses assisted: 8,783.
Program: Small Firm Attraction and Retention Grant; Total dollars
allocated to program: 105; Total dollars disbursed to businesses: 12;
Total number of businesses assisted: 246.
Program: Business Recovery Loan Fund; Total dollars allocated to
program: 50; Total dollars disbursed to businesses: [A]; Total number
of businesses assisted: [A].
Program: Technical Assistance; Total dollars allocated to program: 5;
Total dollars disbursed to businesses: 0.2; Total number of businesses
assisted: b.
Program: Bridge Loan; Total dollars allocated to program: 15; Total
dollars disbursed to businesses: [C]; Total number of businesses
assisted: [C].
[A] This program has not yet begun to disburse funds or provide
assistance.
[B] This program does not provide direct financial assistance to
businesses, but provides grants to nonprofit organizations to provide
technical assistance to businesses.
[C] Although no CDBG funds have been disbursed for this program, $6.3
million in other city and state funds have been provided in loan loss
reserves to private banks and nonprofit lenders that have provided
$31.5 million in loans to 950 businesses. Empire State plans to
reimburse city and state disbursements with CDBG funds in the future.
Sources: Empire State and GAO analysis of the Empire State Disaster
Recovery Database.
[End of table]
In addition to the small business programs, Empire State officials said
that retention assistance for larger businesses is particularly
important to the future of the lower Manhattan economy. To a great
extent, larger businesses and their employees provide small businesses
in lower Manhattan with a client base. Small businesses in turn provide
larger businesses and their employees with services ranging from
business consulting, accounting, and office supplies to personal
services, such as dry cleaning, dining establishments, and newsstands.
Empire State has allocated $5 million for a recovery grant program for
larger businesses with more than 500 employees nationwide, but with
fewer than 200 employees in lower Manhattan, from which it has
disbursed $3.1 million to assist 18 businesses. Empire State also has
allocated $170 million for a larger firm business attraction and
retention program, and LMDC is seeking approval to provide Empire State
with additional funds, of which $150 million would go toward this
program, bringing the total program allocation to $320 million. As of
September 11, 2002, no disbursement of funds had been made from this
program. According to Empire State, it had made offers to 102
businesses of which 50 had accepted offers totaling $140 million--a
process that requires a much longer time frame than does the SFARG
Program.
Business Recovery Grants Compensate for Economic Loss:
The BRG Program for small businesses offers grants to compensate for
economic losses. The BRG Program is Empire State‘s most far-reaching
business assistance program. The first BRGs were provided in mid-
February 2002. As of September 11, 2002, 8,783 businesses had received
BRG grants totaling $254 million. The median grant amount was $9,261.
Businesses with fewer than 50 employees accounted for 95 percent of the
businesses receiving BRGs and received $200 million, or 79 percent of
the total amount of BRGs disbursed. All types of businesses are
eligible for BRGs, and assisted businesses can be categorized into
various sectors, as shown in figure 1. The largest number of businesses
assisted falls into three sectors: professional and technical services;
finance, which also includes insurance; and retail trade.
Figure 1: Types of Businesses Receiving Business Recovery Grants:
[See PDF for image]
Source: GAO analysis of Empire State database information on 8,783 BRG
recipients.
[End of figure]
To be eligible for a BRG, businesses must have had fewer than 500
employees worldwide; have been located on or south of 14th Street in
Manhattan on September 11, 2001; and have suffered uncompensated
economic losses related to the attacks. The program identifies four
geographic areas, or zones, upon which it then bases the number of days
of revenue for which it will compensate. In the BRG computation, the
number of days of revenue increases the closer the zone is to the World
Trade Center site. See appendix II for a map that identifies these
geographic areas. Revenue periods range from 3 to 25 days, and maximum
grant amounts range from $50,000 to $300,000, not to exceed a business‘
economic loss after adjusting for insurance and other
compensation.[Footnote 12] In addition to other eligibility
requirements, businesses must still be operating in the city or agree
to resume operations in the city within 1 year of the receipt of grant
funds as well as agree to retain a substantial portion of their
business operations in the city for at least 3 years. The program will
accept applications through December 31, 2002.
The size of businesses assisted varies as measured by the number of
employees and annual revenues. Businesses with fewer than 10 employees
accounted for about 75 percent of the businesses assisted (see fig. 2).
Recipients of BRG assistance who had revenues of less than $1 million
accounted for 5,785 businesses, or about 67 percent of the businesses
assisted (see fig. 3).
Figure 2: Percentage of Business Recovery Grant Recipients, by Number
of Employees:
[See PDF for image]
Source: GAO analysis of Empire State database information on 8,783 BRG
recipients.
[End of figure]
Figure 3: Annual Gross Revenues of Businesses Receiving Business
Recovery Grants:
[See PDF for image]
Source: GAO analysis of Empire State database information on 8,662 BRG
recipients.
[End of figure]
The BRG Program has provided assistance to thousands of businesses;
however, it has awarded only about one-half of the number of grants it
originally estimated and has not covered a substantial portion of the
uncompensated economic losses reported by businesses. Although Empire
State estimated that it would make 19,600 grant awards, on the basis of
the number of small businesses believed to be located in the eligible
area, as of September 11, 2002, it had provided 9,373 grants.[Footnote
13] Empire State is making additional outreach efforts and hopes to
increase the number of businesses assisted. Analysis of the economic
losses reported by businesses shows that at the median of businesses
receiving a BRG, the BRG covered about 17 percent of a business‘ losses
that were not covered by insurance and other city and state
grants.[Footnote 14] Empire State recently changed the BRG computation,
both retroactively and prospectively, to increase the number of
business day revenues considered in determining the grant amount,
particularly for those businesses that were in or near the World Trade
Center. This change will result in increased payments to some
businesses and thereby reduce the amount of their uncompensated
economic losses.
With new criteria for increased payments and additional applications
expected, Empire State is estimating that the total allocation for the
BRG Program will be $481 million. Empire State also is expected to use
CDBG funds to reimburse city and state programs that provided grants to
small businesses soon after the September 11 attacks. The city and
state programs have disbursed $24 million in assistance; however, as of
September 11, 2002, neither had filed for reimbursement. As previously
noted, LMDC is currently seeking approval to provide Empire State with
additional CDBG funds, of which $150 million would go toward the BRG
Program, bringing the total program allocation from $331 million to
$481 million. Empire State and LMDC plan to meet the federal
legislative requirement that $500 million in CDBG assistance be used to
compensate small businesses, nonprofits, and individuals located in
lower Manhattan almost exclusively through the BRG Program. The
remaining expenditures will come from part of LMDC assistance to
individuals through its housing assistance program.[Footnote 15]
Small Firm Attraction and Retention Grants Are Meant to Help Businesses
Move to or Remain in Lower Manhattan:
The SFARG Program offers grants to qualifying businesses (i.e.,
businesses with no more than 200 employees that are located or planning
to locate in the general area south of Canal Street) that sign a new
lease or renew an existing lease for a minimum of 5 years.[Footnote 16]
For existing businesses to be eligible, their current lease must expire
no later than December 31, 2004, except for businesses located in an
area designated as the ’October 23rd Zone.“[Footnote 17] The program
offers grants on the basis of the number of employees in the business.
Grant payments are made in two installments, the first at the time of
application approval and the second 18 months after the application
date. Total payments are $3,500 per employee, except for businesses
that were in the ’Restricted Zone“ and remained downtown, for whom
total payments are $5,000 per employee.[Footnote 18] The program will
accept applications through December 31, 2004.[Footnote 19]
The first SFARG assistance was provided on June 13, 2002. As of
September 11, 2002, Empire State disbursed $12 million to 246
businesses in initial installment payments. The median grant amount was
$27,500. The SFARG Program initially was limited to businesses with a
minimum of 10 and no more than 200 employees. In response to public
reaction, the program was amended to expand eligibility to all
businesses with no more than 200 employees, with no lower limit. The
program also has been criticized for excluding businesses that were
located in the eligible area as of September 11, 2001, but that had
long-term leases that did not expire by December 31, 2004. Business
advocates argue that those businesses also had a demonstrated
commitment to the area, which should make them eligible and not place
them at a disadvantage relative to new businesses coming to the area.
Empire State officials told us that SFARG was designed to provide
incentives to businesses at risk of leaving, not for those that already
had long-term commitments in the area. Additional criticism has been
made that SFARG took too long to put the program in place and that
relatively few businesses have received any benefits. LMDC is currently
seeking approval to provide Empire State with additional CDBG funds, of
which $50 million would go toward the SFARG Program, bringing the total
program allocation from $105 million to $155 million.
Business Recovery Loan Program Will Increase Access to Capital:
The Business Recovery Loan Program will provide funding to community-
based lending organizations, which in turn will provide low-cost
working capital loans to businesses that were adversely affected by the
terrorist attacks and to businesses that have subsequently located or
will locate new operations in lower Manhattan.[Footnote 20] The program
is intended to enhance access to capital to businesses, particularly to
those that do not meet SBA credit or eligibility criteria for disaster
loans. Loans are available to businesses (1) located on or south of
14th Street in Manhattan as of September 11, 2001; (2) located in the
five boroughs of New York City, but outside of lower Manhattan, that
were adversely affected because at least 10 percent of their revenues
were derived from sales or services to other businesses located on or
south of 14th Street in Manhattan; or (3) newly located on or south of
14th Street in Manhattan since September 11, 2001.
As of September 11, 2002, Empire State had selected 10 organizations to
participate in the Business Recovery Loan Program. State officials had
not disbursed any funds from the program and were in the process of
contracting with the lending organizations. Under the program, lending
organizations can make loans up to $250,000 per business. Repayments of
principal by the borrowers of eligible loans may be retained by the
lending organization as capital for making additional small business
loans in the lender‘s target area. A business advocacy group has
criticized Empire State for taking too long to put the program in
place.
Technical Assistance Program Funds Legal, Planning, and Other Aid:
The Technical Assistance Program provides grants to community-based
organizations and other service providers to allow them to provide
additional assistance to businesses affected by the World Trade Center
disaster. The program allocation is $5 million, with a maximum grant of
$250,000 per organization. Technical service providers are to assist
small businesses with strategic planning; finance, insurance, and legal
issues; and basic business management and to help businesses identify
and access disaster funds available from CDBG-funded state programs and
other city, state, and federal government agencies. The service
providers may also assist with marketing, member development, and
attraction efforts. To qualify for technical assistance, businesses
must have fewer than 200 employees, have been affected by the disaster,
and currently be located south of 14th Street in lower Manhattan.
As of September 11, 2002, Empire State had selected 23 community-based
and other service providers for the program and had provided a total of
$224,000 to 4 of the organizations--some of which already offered
technical assistance as part of their ongoing assistance programs.
Although such organizations already have offered services to some
businesses and over a year has elapsed since the attacks, a state
official said that there is still a need for additional services and
that more and better information currently exists to help make business
decisions than in the period immediately after September 11, 2001.
Empire State officials also hope that businesses that obtain technical
assistance will apply for financial assistance, if they have not done
so already.
Bridge Loan Allocation Will Contribute to City and State Efforts:
The Empire State action plan allocates $15 million to provide loan loss
reserve subsidies to lenders making bridge loans to affected
businesses. Empire State is a partner in the World Trade Center
Disaster Recovery Bridge Loan Program, a joint city-state program that
began in October 2001. Through this program, the city and state provide
loan loss reserve subsidies to participating lenders, which make bridge
loans to businesses awaiting SBA loan approvals.
Eligible businesses are New York City-based, commercial, industrial,
and retail enterprises and not-for-profits that were affected by
September 11 and that are applying for SBA disaster loans.
Participating banks and community-based lenders make the bridge loans
to provide interim capital to businesses. If the SBA loan is approved,
the business pays off the bridge loan with the SBA loan proceeds. If
the borrower does not qualify for an SBA loan, the lender may
restructure the bridge loans as term loans. In the original Bridge Loan
Program, New York City and State shared equally in providing
participating lenders with a 20 percent loan loss reserve subsidy for
approved bridge loans. Empire State will use CDBG funds to reimburse
the city and state for their loss reserve expenditures at a later date.
Participating lenders have disbursed $31.5 million in bridge loans to
950 businesses as of September 11, 2002. The total city-state loan loss
reserve payments total $6.3 million. The Bridge Loan Program is open
until January 31, 2003, corresponding to the SBA Disaster Loan
Program‘s ending date.
SBA, New York City and State, Banks, and Nonprofit Organizations Have
Also Assisted Small Businesses:
Empire State and LMDC are not alone in their efforts to provide
assistance to small businesses in lower Manhattan. There are many other
organizations from all levels of government and the private and
nonprofit sectors that have come forward to offer loans, grants, and
technical assistance to small businesses affected by the disaster.
Often these organizations were providing assistance within weeks or
months of September 11, well before the Empire State programs became
available. SBA disaster assistance is the other major source of federal
assistance to businesses in New York. SBA began making loans within
days after the terrorist attacks and has since made thousands of loans
to businesses throughout the region. New York City and State offered
cash grants to businesses within the first few months after the
terrorist attacks as well as bridge loans to businesses through
participating lenders. Some banks have also provided additional
assistance and short-term loans to affected businesses. Finally, many
nonprofit organizations, often funded by donations and charitable
groups, have made loans and grants and offered other aid to hundreds of
small businesses. Although these programs have not reached as many
businesses or provided as much funding as the Empire State programs,
they have filled a need by providing early assistance and targeting
hard-to-reach groups and businesses. Some of these organizations, as
well as business advocacy groups, also have played an important role in
facilitating the flow of information among businesses and representing
the interests of small businesses recovering from the disaster.
SBA Disaster Assistance Aids Businesses, Nonprofits, Homeowners, and
Renters:
In the aftermath of September 11, SBA declaration number 3364, ’New
York City Explosions and Fires,“ entitled business owners, nonprofit
organizations, homeowners, and renters in New York City and the
surrounding region to apply for SBA physical disaster loans and
economic injury disaster loans (EIDL).[Footnote 21] Congress made
special appropriations of $175 million to SBA for disaster assistance
to respond to the terrorist attacks. SBA can use the appropriations to
provide approximately $651 million in loans, while allowing $40 million
for program administration. The appropriations are being used to cover
the ’subsidy rate“ of the loans, which represent the costs to the
government for the loans.[Footnote 22] From its first loan on September
15, 2001, through September 11, 2002, SBA provided 4,381 loans totaling
$346 million within the broadly defined disaster area; of this $346
million, businesses in lower Manhattan received $154 million.[Footnote
23] SBA‘s deadline for filing applications has been extended several
times and is now January 31, 2003.
Physical disaster loans go to eligible business owners (for any size
business), nonprofit organizations, homeowners, and renters. Business
loan terms are for a maximum of 30 years at a 4 percent interest rate
when no credit is available elsewhere.[Footnote 24] The loans can be
used to repair or replace disaster-damaged property, including real
estate, machinery and equipment, inventory, and supplies. SBA also
gives EIDLs to eligible small businesses and nonprofits. SBA determines
what constitutes a ’small“ business on the basis of the type of
business and its revenue or number of employees.[Footnote 25] EIDL
loans can be used for working capital, including making payments on
short-or long-term notes or accounts payable. The loans carry a 4
percent interest rate but are only available to applicants with no
credit available elsewhere. Loan amounts for both physical disaster and
EIDL loans have been raised to $10 million and nonprofits have been
made eligible for this disaster only. Collateral is required for
physical loans over $10,000 and for EIDL loans over $5,000. SBA also
requires that applicants have a reasonable ability to repay the loan
and any other obligations from expected earnings. Table 2 shows SBA
assistance to businesses in lower Manhattan, as of September 11,
2002.[Footnote 26]
Table 2: SBA Loans to Businesses in Lower Manhattan, as of September
11, 2002:
Dollars in millions.
Program: Physical Disaster Loan; Number of approved business loans:
503;
Total amount of loan approvals: $32; Total amount of loan
disbursements:
$16.
Program: Economic Injury Disaster Loan; Number of approved business
loans:
1,983; Total amount of loan approvals: 168; Total amount of loan
disbursements: 139.
Program: Total; Number of approved business loans: 2,486; Total amount
of loan approvals: $201; Total amount of loan disbursements: $154.
Note: Program amounts may not sum to totals due to rounding.
Source: SBA.
[End of table]
Business advocacy groups have criticized SBA for requiring collateral,
particularly personal residences, for business loans and for denying
too many loans. According to SBA data, denials and withdrawals have
accounted for 54 percent of all business application
dispositions.[Footnote 27] The primary reasons for denial were ’no
repayment ability“ and ’unsatisfactory credit.“ The primary reasons
identified for withdrawals were ’no IRS record found“ and ’failure to
furnish additional information.“ SBA has also received criticism for
not providing loans in a timely manner. According to SBA data, the
average elapsed time from the receipt of a completed business loan
application to disbursement issued is 38 days.[Footnote 28] Although
additional funding remains available for disaster loans, the number of
applications has dwindled in recent months. SBA officials said that
some recent applications are for businesses that already have received
loans but are seeking additional loans.
SBA‘s outreach efforts have included opening multiple locations to
distribute and explain applications and door-to-door outreach to
affected businesses. At one time, SBA worked from 20 different
locations throughout Manhattan at which business owners could get SBA
disaster applications and information, including 1 location in
Chinatown with multilingual personnel. SBA currently makes loan
applications and information available at 2 locations and over the
telephone and Internet. SBA‘s Service Corps of Retired Executives
Program also has provided business counseling to affected owners.
Small Business Development Centers Provide Technical Assistance and
Financial Planning Advice:
Funded in part by SBA and the state of New York, the New York Small
Business Development Centers (SBDC) have seen increased demand at
regional locations in their roles of providing business counseling and
management assistance to small businesses since September 11,
2001.[Footnote 29] SBA has trained SBDC personnel to help business
owners complete disaster loan applications; in turn, SBDC personnel
have helped more than 500 business owners apply for SBA disaster loans.
The SBDC program has also established its own loan fund through private
donations and provided $5,000, 3-year loans at a 3 percent interest
rate to 170 businesses, for a total disbursement of $850,000. Although
the loan program is now closed, having expended all of its funds, SBDC
officials are looking to obtain additional funding to reopen the
program in the near future. SBDC officials also anticipate obtaining
state funding to establish another loan program to provide additional
assistance to affected small businesses.
City and State Programs Also Give Grants to Small Businesses:
Both the city and state of New York established assistance programs
within months of the World Trade Center attacks.[Footnote 30]
Specifically, the city established the New York City Lower Manhattan
Business Retention Grant Program to provide cash grants to nonretail
businesses. This program began on November 14, 2001, and provided cash
grants totaling $10 million to 1,674 nonretail businesses, including
manufacturers and professional service firms. The program stopped
accepting applications on March 31, 2002. To qualify, businesses had to
be located south of Houston Street and employ 50 or fewer workers; they
also had to apply for a loan from SBA or an approved lender. A business
could receive up to $2,500 upon completing a loan application and up to
a $7,500 cash grant (for a maximum of $10,000) upon approval of the
loan, depending on the size of the requested loan. Moreover, businesses
that were located in the World Trade Center were eligible for the full
$10,000 without having to apply to SBA.
The state established the World Trade Center Retail Recovery Grant
Program to provide cash grants to retail businesses. This program began
on November 5, 2001, and provided 3,048 retail businesses in lower
Manhattan with cash grants totaling $13.7 million. Eligible businesses
included retail and personal service firms, with fewer than 500
employees, located south of Houston Street. The program offered
businesses compensation equal to 3 days of lost revenue, capped at
$10,000, and required that businesses continue to operate in New York
City. The state closed the program to new applications on December 31,
2001, after which Empire State began offering grants through the CDBG-
funded Business Recovery Grant Program. Under the Empire State BRG
Program, if a business had previously received a Retail Recovery Grant,
the BRG grant amount was reduced by that amount.
While the city and state grant programs are now closed to new
applications, a joint city-state bridge loan program--the World Trade
Center Disaster Recovery Bridge Loan Program--that works in cooperation
with banks is still available, as previously described in this report.
This program has participating banks and community-based lenders
provide low-cost bridge loans to small businesses and nonprofits. The
city and state each provided banks with 10 percent of the approved loan
amount as a loan loss reserve. The first program loans were made on
October 5, 2001. Subsequently, Empire State allocated $15 million from
its CDBG funds to provide loan loss reserve subsidies and expects to
reimburse the city and state for their prior and continuing
expenditures.
In addition to the grant programs, within days of the September 11
attacks, both the city and state established emergency walk-in centers
that assisted small businesses. A toll-free hotline also was
established to direct callers to emergency services. Business location
services were provided as well as comprehensive on-line and hard-copy
directories of emergency and business services available from
governmental and nongovernmental sources. Outreach has included radio
and print advertisements, direct mail, direct telephone calls,
informational workshops, and an ’Adopt a Company“ Program.
Banks Aided Small Businesses:
In addition to their participation in the Bridge Loan Program, some
banks in New York offered additional assistance to small businesses,
although there are no comprehensive data on the amount of total
assistance they provided. Some banks offered short-term loan programs
for businesses affected by the disaster. Loan terms were usually short,
extending up to 5 years, with an interest rate at or below prime.
However, banks did maintain existing credit standards; consequently,
some banks had a high denial rate. For example, one bank denied over 80
percent of the applications that it received.
Nonprofit Organizations Stepped in Quickly after September 11 and
Continue Offering Services to Small Businesses:
After the September 11 terrorist attacks, several nonprofit
organizations that traditionally assisted small businesses and had an
interest in the business environment of lower Manhattan saw an
immediate need that they could fill. Many nonprofits created programs
for affected small businesses within weeks of the disaster and raised
funds from banks, foundations, and other private contributors. As more
disaster-related funding has become available, the nonprofits have been
able or are seeking to supplement their original funds to expand or
continue programs. The September 11th Fund, an organization dedicated
to providing emergency and long-term assistance to the victims of
September 11, became a major funding source for the nonprofits. The
fund set aside $50 million to help small businesses and provided
significant funding to many of the organizations mentioned below.
Additionally, some of the nonprofits discussed below and others have
participated in the city and state‘s Bridge Loan Program, have been
selected to receive funding from Empire State to provide technical
assistance, and/or have been selected to receive some of the $50
million of loan capital that Empire State will be awarding.
Nonprofits have been able to offer different and sometimes more
personal services than those provided through the larger federal
programs. For instance, Accion New York (Accion), a small business
mircrolender, offers a package of loans, small grants, and personal
technical assistance through its newly created ’American Dream Fund.“
These services include help in completing forms and creating needed
financial documents. The New York City Partnership provides businesses
with recoverable grants and intensive technical assistance, such as a
mentor to help with future business planning. The partnership also
created a goods and services clearinghouse for businesses affected by
the disaster. Another nonprofit, Seedco, offers not only loans and
grants, but also wage subsidies to enable small businesses to meet
payroll and retain workers who might otherwise be laid off. For each
business, Seedco will subsidize 50 percent of the salary of up to 10
employees who make $12 an hour or less.
Often, nonprofit programs will specifically target types of businesses
that are either overlooked or ineligible for federal programs or other
nonprofit assistance. Renaissance Development Corporation
(Renaissance), which has been working in Chinatown since 1973, markets
its programs to affected businesses, such as the garment industry and
limousine drivers. Accion targets businesses that have been turned down
for SBA loans; specifically, Accion established a working relationship
with SBA in which SBA refers these businesses to Accion. Accion also
was located at a business recovery center, where clients had access not
only to Accion but also to Empire State and SBA programs. The
partnership‘s program specifically chose to target retail businesses
with 50 or more employees, in part, because Seedco‘s program covers
those with fewer than 50 employees. Many of the nonprofits have far
more flexible lending criteria than either SBA or the banks, thereby
allowing them to make loans the others have eschewed. Unlike SBA,
Renaissance does not require collateral or tax receipts, instead it
relies on store receipts, site visits, lottery sales, and personal
knowledge of a business to determine business viability. Table 3 shows
major nongovernmental assistance as of September 11, 2002.
The nonprofits noted above and other groups also have played an
important role in advocating for the interests of small businesses. For
example, newly founded business advocacy groups, such as From the
Ground Up and the World Trade Center Tenants Association, have lobbied
Empire State, city and federal officials, and others to change programs
to benefit small businesses. Some of these groups also have helped
facilitate the flow of information among businesses and organizations,
either formally or informally. The Manhattan Chamber of Commerce, for
instance, has held networking events in lower Manhattan to bring
various resources to one place. Seedco has published a widely used
directory of resources available to help small businesses.
Table 3: Major Nongovernmental Business Assistance Programs, as of
September 11, 2002:
[See PDF for image]
Note: The nonprofits received loan loss reserve subsidies from the city
and state‘s Bridge Loan Program for some of the reported loans.
Sources: Accion, Seedco, New York City Partnership, and Renaissance.
[End of table]
Agency Comments:
We provided HUD, SBA, and Empire State with an opportunity to review
this report. They provided comments that were technical in nature,
which we have addressed in this report where appropriate.
We are sending copies of this report to the Ranking Minority Member of
the House Committee on Small Business, the Chairman and Ranking
Minority Member of the Senate Committee on Small Business, other
appropriate congressional committees, the Secretary of Housing and
Urban Development, and the Administrator of the Small Business
Administration. We will also make copies available to others on
request. In addition, this report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact Nancy
Simmons or me at (202) 512-8678. Key contributors to this report were
Catherine Hurley, Mark McArdle, Dan Meyer, and Barbara Roesmann.
Sincerely yours,
Signed by William O. Jenkins, Jr.
William O. Jenkins, Jr.
Director, Financial Markets and
Community Investment:
[End of section]
Appendix I: Scope and Methodology:
To obtain information on the assistance provided to small businesses
from Community Development Block Grant (CDBG) supplemental funding, we
interviewed officials from the Department of Housing and Urban
Development (HUD), New York State‘s Empire State Development
Corporation (Empire State), and the Lower Manhattan Development
Corporation (LMDC). For our analysis, we obtained detailed program
information and data on the various programs that HUD, Empire State,
and LMDC have created to assist businesses after September 11,
including an Empire State database of grant recipients. This database
is the same one used by the HUD Office of Inspector General to monitor
expenditures in New York. We ascertained how information for this
database was collected and maintained to determine its reliability, and
we found the information to be reliable for our purposes.
To obtain information on other sources of funds available to rebuild
and sustain business in lower Manhattan, we interviewed officials from
the following: the Small Business Administration (SBA), the New York
City Economic Development Corporation, the New York Small Business
Development Center (SBDC), FleetBoston and the Bank of New York, and
nonprofit organizations that provided financial assistance. We selected
the nonprofit organizations by reviewing various media and Internet
sources on the rebuilding effort in New York as well as through
referrals from other organizations concerned with economic renewal in
lower Manhattan. We met with officials from the following nonprofit and
other organizations that offer financial assistance toward the
rebuilding and economic renewal efforts:
* Accion New York,
* Downtown Alliance,
* New York City Partnership,
* Renaissance Development Corporation,
* SeedCo, and:
* the September 11th Fund.
We also met with business advocacy groups, whose directors are often
small business owners, to obtain their views on the assistance that
Empire State, SBA, and others provided. These groups included the
following:
* From the Ground Up,
* Manhattan Chamber of Commerce,
* Tribeca Organization,
* Wall Street Rising, and:
* the World Trade Center Tenants Association.
We obtained the Empire State disaster recovery database, which captured
data on program activity through September 11, 2002. We used these data
to calculate descriptive statistics on the numbers of businesses,
dollar amounts, and other characteristics of the Business Recovery
Grant (BRG) Program, the Small Firm Attraction and Retention Grant
(SFARG) Program, and the large business recovery grant program. We used
median instead of mean values because the median values were more
representative of the ’typical“ grant.[Footnote 31] In addition, we
analyzed the database to determine other characteristics of BRG
recipients, including annual gross revenues, number of employees, type
of business on the basis of the North American Industry Classification
System code given, and the extent to which BRGs covered businesses‘
reported losses. We limited our analysis to disbursed grants. When
multiple grants went to the same business as the result of an appeal or
from an award for a supplemental grant, we summarized the data by
business, not by grant. Since the BRG Program includes nonprofits in
addition to small businesses, we included nonprofits in our analysis,
although entities that identify themselves as nonprofits accounted for
less than 3 percent of the total receiving grants. Other conditions or
limitations are described in the explanations of specific analyses that
follow.
For our analysis of business employee size, we used the total number of
employees of the business; when the business had other business
affiliations, we used the total number of employees worldwide. The BRG
Program uses the total number of employees worldwide to determine if a
business qualifies as a small business. In our analysis of revenues of
BRG recipients, we used the gross revenue amount reported at the
business location. This gross revenue amount is the figure used in
computing the grant amount. The database did not have total business
gross revenues that included affiliated businesses. We included both
businesses that received one grant and businesses that received
multiple grants, when the database included the same gross revenue
figure for each of the multiple grants. Also, Empire State informed us
that the gross revenue entries include projected annual revenues for
some new businesses that did not have a year of revenue data, as well
as annual expenses, in lieu of revenue, for some businesses that do not
generate revenues and for nonprofits. For our analysis of type of
business, we used the business classification code from the database
and grouped the results by the first two letters of the code, which
designate the general industry type. Where the groups represented less
than 3 percent of all businesses, we grouped them in the ’other“
category.
We made two calculations of the extent to which BRGs compensated for
business losses. The business loss data are self-reported and unaudited
by Empire State. In the first calculation, we determined to what extent
BRGs covered the uncompensated loss incurred by each business. The
uncompensated loss was determined by using the business ’net loss“
database entry, which reflected remaining losses after adjusting for
insurance proceeds and the city‘s Lower Manhattan Business Retention
Grants; we further reduced this amount by the amount of the state
Retail Recovery Grant. The BRG amount was then divided by the
uncompensated loss figure to obtain the percentage of uncompensated
loss covered by BRGs for each business. Where businesses had received
multiple grants and the net loss figures were the same for each grant,
we totaled the disbursed grant amounts and divided the total by the
uncompensated loss amount. In the second calculation, we determined to
what extent BRGs covered the total loss incurred by each business. We
divided the BRG amount by the total business loss to obtain the
percentage of the total loss covered by BRGs for each business. Where
businesses had received multiple grants and the total loss figures were
the same for each grant, we totaled the disbursed grant amounts and
divided it by the total loss amount. To more accurately characterize
the loss and compensation experience of small businesses in lower
Manhattan for this report, we considered the entire distribution of the
above statistics over all businesses to identify any uneven
distribution around the median, or 50 percentile, which was the most
common single summary measure we chose to report.
We conducted our review between April and September, 2002 in
Washington, D.C., and New York, New York, in accordance with generally
accepted government auditing standards.
[End of section]
Appendix II: Map of Lower Manhattan with Highlighted Empire State
Program Areas:
[See PDF for image]
Source: Empire State.
[End of figure]
FOOTNOTES
[1] Not-for-profit organizations are also eligible under the programs
and are included in the ’business“ statistics.
[2] A bridge loan is a short-term loan that is intended to provide
financing until a more permanent arrangement is made.
[3] These funds were appropriated on a no-year basis and remain
available until expended.
[4] The 2001 Emergency Supplemental Appropriations Act for Recovery
From and Response to Terrorist Attacks on the United States, Pub. L.
107-38, 115 Stat. 220 (2001).
[5] Section 434 of the Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act, 2002
(HUD 2002 Appropriations), Pub. L. 107-73, 115 Stat. 651, (2001).
[6] The Department of Defense and Emergency Supplemental Appropriations
for Recovery From and Response to Terrorist Attacks on the United
States Act, 2002 (Emergency Supplemental Act, 2002), Pub. L. 107-117,
115 Stat. 2336 (2002), provided $2 billion for emergency response to
the September 11 attacks for CDBG (Community Development Fund). The act
also required that of the total amount made available in the Community
Development Fund, no less than $500 million shall be made available for
individuals, nonprofits, or small businesses located on or south of
West 14th Street (west of its intersection with 5th Avenue) or on or
south of East 14th Street (east of its intersection with 5th Avenue),
with a limit of $500,000 per small business for economic loss.
[7] The 2002 Supplemental Appropriations Act for Further Recovery From
and Response to Terrorist Attacks on the United States, Pub. L. 107-
206, appropriated an additional $783 million for the Community
Development Fund for emergency expenses to respond to the September 11
attacks.
[8] Section 434 of HUD 2002 Appropriations authorized the Secretary of
HUD to waive or specify alternative requirements for any provision of
any statute or regulation the Secretary administers in connection with
the obligation by the Secretary or the use by the recipient of these
funds or guarantees (except those related to fair housing,
nondiscrimination, labor standards, and the environment).
[9] SBA officials stated that they are providing disaster loan data to
HUD so they can determine if any of their grants (issued subsequently
to SBA disaster loans) through their grantee were made for duplicative
purposes.
[10] Empire State Development Corporation has been adopted as the
business name of the New York State Urban Development Corporation.
[11] Throughout this report, we use the term ’small business“ as
defined by the particular assistance provider and program. For example,
Empire State has defined small businesses as those with fewer than 500
employees for its Business Recovery Grant Program and 200 or fewer
employees for its Small Firm Attraction and Retention Grant Program.
Other agencies and programs have different eligibility standards.
[12] Prior to August 28, 2002, the number of days of revenue included
in the grant determination was 2 to 10, depending on the zone in which
a business was located. According to Empire State officials, this
change was made when Empire State reassessed the amount of funding
available and the needs of businesses, particularly those that were
located in or near the World Trade Center site.
[13] These grants were made to 8,783 businesses. Some businesses
received multiple grants because of appeal decisions or supplemental
grant awards.
[14] This means that BRGs covered less than 17 percent of uncompensated
losses for businesses below the median, and that BRGs covered more than
17 percent of uncompensated losses for those businesses above the
median. An additional analysis of the extent to which BRGs covered
total estimated losses shows that at the median, BRGs covered an
estimated 15 percent of total estimated losses, without accounting for
other compensation.
[15] In addition to the housing assistance that LMDC provides to those
persons who make a commitment to remain in lower Manhattan, it offers a
$1,000 grant per household to those persons who have continued to live
in the area since September 11, 2001.
[16] The exact area description for the eligible area is ’that area
within the Borough of Manhattan bounded on the north by the centerline
of Canal Street, from the Hudson River to Rutgers Street, then
southeast along the centerline of Rutgers Street and continuing along
the centerline of Rutgers Slip to the East River.“ In addition,
businesses that were in an area defined as the ’Restricted Zone“ may
obtain a grant of $3,500 per employee, if they relocate outside of the
general eligibility area on or prior to December 31, 2002, but still
remain in the city.
[17] An area designated by the Mayor‘s Office of Emergency Management
wherein pedestrian and vehicular traffic was restricted during
September 27 through October 23, 2001. A company located in this zone
must sign a new lease; renew an existing lease; or reaffirm an existing
lease, which must expire on or after September 11, 2006.
[18] An area designated by the Mayor‘s Office of Emergency Management,
wherein pedestrian and vehicular traffic was restricted during
September 19 through September 26, 2001 (see app. II).
[19] Except for those applicants who enter into new leases between
September 1, 2004, and December 31, 2004, who will have until April
2005 to submit a completed application.
[20] Funds may be used for payroll; rent; utilities; inventory; and, in
certain circumstances, refinancing existing debt.
[21] Under another declaration creating an expanded EIDL, number 9TNY,
SBA made all New York businesses eligible for assistance; however, the
expanded EIDL could not be funded out of supplemental appropriations.
In addition, SBA was authorized $75 million for a new Supplemental
Terrorism Activity Relief (STAR) Program, which provided $4.5 billion
in additional funding for 7(a) loans for businesses anywhere in the
United States that can show direct or indirect adverse impact as a
result of September 11. The 7(a) Loan Guaranty Program operates through
private-sector lenders providing loans that are, in turn, guaranteed by
SBA. We have not included either SBA‘s expanded EIDL or the STAR
Program in our review, since we are focusing on lower Manhattan. Also,
businesses in lower Manhattan would be unlikely to use STAR, since its
terms are not as favorable as those offered through the disaster
assistance loan under the explosions and fires declaration.
[22] SBA budgeted $6 million for physical loans, which at a subsidy
rate of 14.67 percent, allows for $41 million in loans. SBA budgeted
$129 million for EIDLs, which at a subsidy rate of 21.16 percent,
allows for $610 million in loans.
[23] For this disaster declaration, the eligible area included 15 New
York counties for either physical or economic injury claims. Additional
eligibility areas for economic injury claims include: 6 additional
counties in New York, 6 counties in New Jersey, 2 counties in
Connecticut, 2 counties in Pennsylvania, and 1 county in Massachusetts.
Nonprofit organizations are also eligible for loans and are included in
our ’business“ statistics.
[24] When credit is available elsewhere, the maximum business loan term
is 3 years at an 8 percent interest rate.
[25] Although many exceptions exist, SBA has established two widely
used size standards-500 employees for most manufacturing and mining
industries and $6 million in average annual receipts for most
nonmanufacturing industries.
[26] This area was defined using zip codes, encompasses an area
identified by the U.S. Department of Labor‘s Bureau of Labor Statistics
as being lower Manhattan, and is roughly similar to the eligibility
area used in the state‘s Business Recovery Grant Program.
[27] Without including application withdrawals, of those applications
processed to a decision to either approve or deny, 44 percent of
business applications were denied.
[28] SBA business loan processing time averaged 12 days from acceptance
of an application to a determination to approve or deny a loan request.
Business loans averaged 18 days from application to SBA‘s issuance of
closing documents, after which time the applicant is responsible for
contacting SBA to set up a closing date.
[29] A national program sponsored and administered by SBA, SBDC
participants are generally universities and community colleges and
networks of service delivery centers that are established to provide
management and technical assistance to small businesses.
[30] The Empire State action plan identifies each of these programs as
providing assistance that may be reimbursed with CDBG funds; however,
as of September 11, 2002, neither the city nor the state had requested
reimbursement for this assistance.
[31] A median value is a measure of central tendency and does not over
represent the influence of a small number of cases with very large
values, as does a mean.
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