They denounce failures in the allocation of loans and aid for Covid-19 to small businesses in the Bronx

Loans and grants given to small businesses in New York City to help fight the COVID-19 crisis, were not awarded equally across all counties. The Bronx suffered the worst, as micro-enterprises there ended up getting fewer pieces of the pie.

This was recently denounced by the Office of the City Comptroller Brad Landerwhich after conducting two audits, confirmed that loan and grant administrators related to COVID they failed to take due diligence to ensure eligibility and equitable distribution of assistance funds.

The Comptroller of the Big Apple, who was personally visiting Hispanic-owned businesses, such as the Mexican restaurant Estrellita Poblana and the Pink Princess storepresented a report with the findings, where he was blunt in noting that businesses in the Bronx received far fewer loans and grants, while Manhattan businesses received more than their fair share.

In his report, the comptroller warned that the Department of Small Business Services handled “inadequate oversight” of two COVID-19 assistance programs: one for interest-free loans and the other for a partial payroll grant. The data showed that eligible Bronx businesses “were denied critical assistance and public funds were unevenly distributed” in the Big Apple.

“Small businesses build the vibrant fabric of our city’s local economies and cultural communities. When the pandemic halted activity in March 2020, the City moved quickly to keep thousands of local businesses afloat, but the mismanagement of these programs meant our public resources were not distributed equitably.” denounced Lander, who insisted that these mistakes must be learned so that vulnerable businesses are not left behind.

“Better oversight and more specific scope and eligibility criteria for future programs will help ensure that The Bronx is not left behind again,” said the Comptroller, who nevertheless acknowledged that the Department of Small Business Services (SBS) provided help quickly, before the federal government opened the Paycheck Protection Program.

The main flaw was that the aid was delivered on a first-come, first-served basis and did not take into account which neighborhoods were most affected by COVID-19, or those that have been neglected or had weaker economic activity. Also, even though the agency had $39 million for the grant program, $6.7 million was never distributed.

According to the data shared by the proceedings carried out by the Municipal Comptroller’s Office, in the midst of the pandemic, between March and April 2020, 404 loans and 3,411 grants were delivered to small businesses, and although Manhattan has 41.3% of small businesses with less than 100 employees throughout the city, received the 56.9% of loans.

The landscape for businesses in the Bronx, which represents the 7.7%, it was so uneven, that of 519 applicants who applied for loans, only 9 were approved, which represents 2.2% of the total approved loans. Likewise, they had smaller amounts of dollars distributed.

The data was even more worrying in businesses with less than 5 employees, because while Manhattan, houses 37.7% Of these types of businesses, 63.1% of the grant funds were distributed there, and more than half in neighborhoods such as Chelsea, Midtown, Tribeca and Downtown.

The X-ray of the smallest businesses in the Bronxwhich has nearly twice as many locations with fewer than five employees as Staten Island, once pointed to a wide disparity in recipients, with 3% of SBS grants being won in both counties.

Other findings found after reviewing 76 applications that benefited from the awarded loans, showed that 39 businesses did not meet one or more requirements; 8 applicants did not demonstrate a decrease in income of at least 25%, and 4 did not prove their businesses were in all five boroughs, while 45 applicants who met all the requirements were rejected.

NYC Comptroller Audit Recommendations

  • Implement secondary or multi-tier reviews to ensure staff are following procedures and determining eligibility correctly when evaluating applications
  • Require applicants to submit federal tax returns, state withholding forms, New York City business tax returns, and accounting records to substantiate income, as well as number of employees and location, as well as obtain tax records from the IRS and New York State, independently
  • Conduct independent record searches or obtain tax records to determine if businesses have pending judgments or liens
  • Communicate changes in documentation requirements to prospective applicant
  • Increase outreach to underserved areas and distribute public funds equitably

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