NYC Comptroller Scott Stringer. Image credit: Office of the New York City Comptroller
Eighty-five percent of the survey respondents expect to go out of business within six months. On July 10, 2020, New York City Comptroller Scott M. Stringer released a comprehensive analysis of the economic hardships minority and women-owned enterprises (M/WBEs) are facing during the COVID-19 pandemic. In response to the survey findings, Comptroller Stringer announced new accountability measures to ensure the City is meeting its M/WBE goals.
The study was conducted in June 2020 and examined 500 City-certified M/WBE’s access to COVID-related contracts with the City, and barriers to federal, City, and private-sector relief. Due to COVID-19, 85 percent of M/WBEs anticipate going out of business within six months, and 30 percent of M/WBEs anticipate closing within 30 days. Eighty percent of M/WBEs that shared revenue information lost a median of $38,000 from March through May.
According to the analysis, M/WBEs faced significant barriers to securing COVID-related contracts with the City for providing services such as technology, staffing, sanitation, medical supplies, and designing and building COVID-19 testing sites. Out of the 62 MWBEs that competed for COVID-related contracts with the City, 60 percent were unable to contact the City, and only ten M/WBEs received a contract.
The analysis also revealed barriers to federal, City, and private sector COVID-19 relief funding. Respondents cited barriers such as restrictive application criteria, high interest rates, and lack of outreach and awareness. Out of the 40 M/WBEs that applied for the New York City Business Continuity Loan, only six were approved. Out of the 48 M/WBEs that applied for the New York City Employee Retention Grant, only 15 were approved. Additionally, 95 percent of surveyed M/WBEs did not receive any private-sector relief.
M/WBEs that were not approved for funding reported that they were ineligible due to low credit scores, the restrictive application criteria, or because funds were already exhausted before their applications were processed. Some respondents were rejected without any explanation as to why they were ineligible.
Along with this report, Comptroller Stringer announced new accountability measures that require the City to provide documented evidence of the City’s efforts to achieve its diversity goals in the contracting process. The City’s goal is to provide at least 30 percent of the dollar amount of City contracts to M/WBEs by 2021, and Comptroller Stringer’s accountability measures will help identify areas that need improvement in the contracting process.
Comptroller Stringer asked the M/WBE survey respondents to identify other ways in which the City can better assist M/WBEs during this time. The respondents suggested that the City provide more flexible grants and loans for reopening expenses such as PPE and cleaning services and providing support for navigating grants, loans, and City contracts.
Comptroller Stringer commented, “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. These findings are alarming and underscore the structural inequities facing M/WBEs and the urgent need for immediate action and relief before M/WBEs in our city are decimated. We will redouble our commitment to holding City agencies accountable and continue our efforts to identify and dismantle systemic barriers to participation. Our economy is strongest when it is equitable and inclusive, and our road to recovery must reflect those values.”
The results of this analysis have led Comptroller Stringer to renew his call for a Chief Diversity Officer to be placed within each City agency to ensure proper representation of people of color and women. Comptroller Stringer provides a biweekly series of online workshops that discuss resources for small businesses and M/WBEs impacted by COVID-19. The workshops can be accessed here.
Comptroller Stringer’s full M/WBE analysis can be accessed here.
By: Victoria Agosta (Victoria is the CityLaw intern and a New York Law School student, Class of 2022.)