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Small businesses describe struggles at legislative hearing 

Business owner Jeff Knauss testifies Wednesday at a joint New York State Assembly and Senate hearing on the effects of the COVID-19 pandemic on the economy.
Screenshot from New York State Legislature hearing
Business owner Jeff Knauss testifies Wednesday at a joint New York State Assembly and Senate hearing on the effects of the COVID-19 pandemic on the economy.

  

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.

Before they took testimony, the hearing began with a moment of silence for the more than 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 have recovered.

Small-business owners, including restaurateur Carlos Suarez, testified at the hearing 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.”

He had four thriving eateries in Manhattan’s Greenwich Village. Initially, they tried offering take-out service, but they're now closed, and most employees have been furloughed.  

Suarez said he received the PPP loan, but it expires in four weeks. He’d like to see it extended to 24 weeks and have a longer period to pay it back. Currently, loan recipients have a six-month grace period and are then required to pay back the loan over a two-year period.

Otherwise, he said, he and other owners in the financially devastated restaurant industry will be even further in debt.  

“It’s fiscal suicide,” Suarez said.  

Natasha Amott, who runs Whisk, a kitchen accessory shop in downtown Brooklyn, also spoke at the hearing.

She received a PPP loan during the second round, but she said the program is fundamentally flawed. When it was designed, it was assumed that many businesses would stay open, if at a reduced level of sales, and that the economy would be fully open again by the end of June.

The loan is forgiven entirely if the business owner retains employees and uses 75% of the loan for payroll. But Amott said retail shops like hers were ordered closed, and she had to furlough most of her workers. She’s converted her business to online sales, but she said that's expensive and inefficient.  

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

Natasha Amott, who runs a kitchen accessory shop in Brooklyn, speaks Wednesday at the hearing.
Credit Screenshot from New York State Legislature hearing
Natasha Amott, who runs a kitchen accessory shop in Brooklyn, speaks Wednesday at the hearing.

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 $600 a week in unemployment insurance, in addition to state unemployment benefits. She said some of her employees 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 that are facing challenges. 

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

“Many of our clients were deemed nonessential, such as car dealerships, small properties, casinos and others,” said Knauss, who added they were forced to shut down “and thus stop spending money on advertising.”  

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

Robert Stark with CJS Architects in Buffalo also said the PPP loan was vital to his firm. He said 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 includes construction and manufacturing. Stark 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 said they should not be penalized with higher rates because they furloughed workers after shutdown orders.

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

Karen DeWitt is Capitol Bureau chief for the New York Public News Network, composed of a dozen newsrooms across the state. She has covered state government and politics for the network since 1990.