Three Years After Sandy: A Bill to Help Small Business in Red Hook

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Some see it as too little, too late, but others are grateful

 

Van Brunt Street is speckled with bespoke cafes, restaurants and boutique bars, all unique to Red Hook’s waterfront culture. Wander into Kevin’s, a mom-and-pop Italian bistro known for its seafood brunch, and you’ll feel coddled by the warm atmosphere, the breezy music, the colorful paintings, and a fully-stocked bar. Through a little peephole, you’ll notice Kevin Moore in the kitchen, whipping up something while his wife, Caroline Parker, dashes about. But after Hurricane Sandy swept the shores of Red Hook three years and one month ago, Kevin’s was a mess.

“It took us seven months—seven whole months—to get back to where we were, and we’re still working through it,” Kevin said, as he leaned against the bar, which has been newly redone, post-Sandy, just like nearly everything else in the restaurant, from the walls to the napkin holders.

And they did all that, the couple points out, without help from the federal government. Moore and Parker didn’t even bother applying for one of the Small Business Administration (SBA) loans that were supposed to ride to the rescue shortly after the hurricane. “We heard from other businesses in the neighborhood that it was a very long, complicated and arduous process,” Kevin said. “Lots of people here were very frustrated with their experience.”

Thanks in part to the efforts of Congresswoman Nydia Velázquez, who represents parts of Brooklyn, including Red Hook, the SBA disaster-loan process is re-opening and being streamlined for Sandy victims. While some are grateful, others think the effort comes too late.

The U.S. Small Business Administration’s disaster program is supposed to provide loans to businesses that have been affected by declared disasters. But after Sandy, as DNA Info reported last year, the federal loans took twice as long to process applications as it was supposed to take. A report by the U.S. Government Accountability Office (GAO) found that it took an average of 45 days to respond to applications, exceeding its 21-day benchmark, according to the report, which was requested by Congresswoman Velázquez.

Worse, local business owners say they found the application process extremely difficult to navigate—the opposite of what might be expected for a rescue loan.

Velázquez announced in a press conference in late October that the new bill would allow local businesses to reapply for the SBA loans. The bill passed the House on November 16 and was on its way to the President’s desk, she said.

According to a spokesperson from Velázquez’s office, the new bill will reopen the SBA disaster loan program and essentially expedite the process, giving entrepreneurs on the East Coast another chance to apply. Additionally, H.R. 208 would improve SBA’s disaster lending functions so it will operate more efficiently in the wake of future disasters. The passage marks the most significant reforms to SBA’s disaster loan programs since Katrina in 2005, according to Velázquez. “It was important for us to help those small businesses that were declined loans so we made a promise to help. It’s a commitment, you know, when disaster strikes, that the federal government is going to be there to help small businesses and home owners to recover,” Velázquez said.

According to the GAO report, the SBA failed to meets its goals mainly due to an overwhelming backlog of applications, reliance on inaccurate estimates of how quickly its staff could process applications, and IT issues. According to local business owners in Red Hook, the problems stretched far beyond information-system issues. Monica Byrne, chef/partner of Home/Made Wine Bar and Roquette Catering, considers herself a “small business aid expert” and recounted the post-Sandy process as insane. “My SBA loan was withdrawn and it was withdrawn for almost every single resident in Red Hook.”

For starters, she said, the time period given to submit the documentation wasn’t sufficient. “They tell you to submit all this crazy documentation, which much of it may have even been destroyed in the disaster itself, and they only give you so much time to do so. And it’s not a reasonable period of time, it’s like they don’t understand that we’ve just been affected by a large disaster at all,” Byrne said. “And then one of the ways they try to offset the statistics is they will say that if you don’t comply within this period, we are going to assume you’re withdrawing your application. So then they don’t say they’ve declined you—you withdrew.”

Mark Snyder, owner of Red Hook Winery, had to withdraw his own application. The interest on the loans was higher than what his bank offered him “I don’t know a single person in Red Hook who received any help from the SBA, assistance-wise,” he said.

In fact, according to findings from the report, Hurricane Sandy disaster loans had the highest rate of application withdrawals, compared to previous declared disasters.

 

Snyder suffered a full spectrum of losses—the winery was flooded in five feet of water, with most of his equipment destroyed, as well as tremendous property and infrastructure damages. At a time when help is needed most, Snyder found the process “extremely daunting.”

“They kept requesting the same information,” he said. “I’ve lost count of how many times I had to resend them the same documents. Oh wait, I sent them my tax returns three times.”

Byrne too, pointed to problem in communication. “There was so much back and forth over emails and phone calls. We had loan officers who would keep changing, and so one of them would end up losing all your documentations and then you would have to start over,” she said. “It took months and months and months.”

As the report found, there is significant imbalance in the number of applications received and approved by the SBA. In Manhattan and Brooklyn, only 19 and 25 percent respectively were approved.

 

St. John Frizell, owner of café-bar Fort Defiance, also applied for the SBA disaster loan, but the SBA withdrew his application. Not only did he find the entire process exhausting and frustrating, but Frizzell thought the system itself was prejudiced. “It’s biased towards larger companies that have accounting firms that can handle all the documentation they ask for, For mom-and-pop businesses like us, it’s hard.”

Byrne echoed these sentiments: “The SBA’s definition of a small business can go up to 500 employees,” she pointed out. “In that case, you have additional help- accountants, administrators and so on.” For the small businesses in Red Hook, the applications felt like another “full-time job.”

Restore Red Hook, a community-fueled organization set up to help small businesses in the area post-Sandy, was  “fabulous,” according to Snyder, who received grant money from the group. Byrne, one of the co-founders, said the organization started organically: “A couple of small business owners and concerned people in the community got together after, and saw that help was needed. They became our board. By the end of the week, we had a website, and the week after, we had our first fundraiser.” Restore Red Hook raised more than $600,000, and gave grants of $11,000 to around 70 businesses. “It was a community-based organization serving the community,” Byrne added. The community collectively raised the money, which reached people within a month after the storm.

The most troubling thing to Byrne about the SBA was what she saw as a disconnect between the people running these loan programs who are trying to help, and the people running small communal businesses who need the help. “It should be an embarrassment to the government that Restore Red Hook made more of an impact in the community than the federal government,” Snyder said. “It was well controlled, with set criteria that demanded accountability,” added Frizell.

 

The SBA’s overall approval rate for Sandy business loan applications was 42 percent, which is lower than those for Hurricane Katrina, Rita, and Wilma.

Susan Povich, owner of Red Hook Lobster Pound, didn’t bother applying to the SBA at all. “The businesses here were all buried in water. I can’t give you my profit and loss statements when my entire business is in water,” she said.

According to Povich, who managed to get back on track due to funding from the city as well as her bank, the new bill improving SBA procedures comes three years too late. “What’s an SBA loan going to do now?” she asked. “You’re either in business or you’re not. It’s too late now.”

But others are hopeful, including people at Red Hook Winery. “Businesses are still affected, ourselves included,” Snyder said. “The bill would be helpful. Nydia has been vocal about how unacceptable the process has been and hopefully this will bring some change.”

Byrne agrees. “It might not be a sexy story anymore, but this is happening. It’s still happening. It’s not three years too late,” she said.

“For the first six months, people are rallying for you everywhere. But after a while, it quiets down. You don’t go around talking about your Sandy debt all day,” she said. “Hopefully this bill will restart that conversation, because people are still suffering.”

 

(featured image source: AP images)

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