Coronavirus hammers NYC MWBEs
The devastating economic effects of COVID-19 could force most New York City-certified minority and women-owned enterprises out of business in as little as the next six months.
According to a survey of over 500 MWBEs done by the city comptroller’s office, 85% of the MWBE firms reported they can’t keep operating given current cash on hand while 30% of the firms polled said they cannot make it through the next 30 days.
Nationwide, 41% of African American-owned businesses, 32% of Latino-owned businesses and 26% of Asian American-owned businesses closed either temporarily or permanently between February and April.
“Minority and women-owned businesses are essential to our economy, generate strong local community wealth, are at the core of our city’s cultural identity and they are bearing the brunt of our economic crisis,” New York Comptroller Scott Stringer said Friday.
The survey found that of the MWBEs which shared revenue information with the comptroller’s office, 80% lost a median of $38,000 in the three-month period during COVID-19 pandemic from March to May and that 50% ranked payroll and 40% said rent were the most challenging expenses.
Additionally, 35% of MWBEs reported they have not been able to operate at all during COVID-19.
The comptroller’s survey also found that 60% of MWBEs that competed for COVID-related city contracts were not able make contact with the city and only 10 reported actually receiving a contract.
“These findings are alarming and underscore the structural inequities facing MWBEs and the urgent need for immediate action and relief before MWBEs in our city are decimated,” Stringer said.
MWBEs also faced barriers to federal, city and private COVID-19 relief funding.
Only 40 MWBEs surveyed applied for the NYC Business Continuity Loan; only six were approved and 48 applied for a city Employee Retention Grant; only 15 were approved.
Of the surveyed MWBEs, 25% did not apply for federal or city funding citing many barriers to entry, such as restrictive application criteria or use of funds. Of those who did apply, 20% were not approved for reasons including low credit scores and restrictive application criteria.
Stringer announced new transparency and accountability measures in the contract registration process requiring the city to provide documentation and market analysis as evidence the city is meeting its MWBE goals.
In light of the city’s goal of awarding at least 30% of the dollar amount of city contracts to MWBEs by 2021, the comptroller said the new measures aim to provide clarity and insight into contracting targets and help identify areas for improvement.
“We will redouble our commitment to holding city agencies accountable and continue our efforts to identify and dismantle systemic barriers to participation,” Stringer said. “Our economy is strongest when it is equitable and inclusive, and our road to recovery must reflect those values.”
The city is one of the largest issuers of municipal debt in the United States. As of the end of the second quarter of fiscal 2020, the city had about $38 billion of general obligation debt outstanding. That's not counting the various city authorities that issue debt.
Moody’s Investors Service rates the city's GOs Aa1 and S&P Global Ratings and Fitch Ratings rate it AA.