Lacking access to federal coronavirus relief, Miami’s smallest businesses face extinction
For the botanicas, bodegas and mom-and-pop restaurants already struggling to survive an epidemic of gentrification in Miami’s Little Haiti, the double whammy of the coronavirus crisis could be the final nail in the coffin, neighborhood advocates say.
In Miami, where the broader economy is underpinned by small retailers, sole shop owners and corner-store entrepreneurs, Little Haiti and other low-income neighborhoods around it in north Miami-Dade and across the rest of the county are among the most vulnerable to commercial collapse in the current pandemic.
But as Congress, the Federal Reserve and the U.S. Treasury Department hastily unveil billion-dollar relief programs for big corporations, small businesses and individuals, advocates say one critical sector has been overlooked — those tiny mom-and-pop shops that form the commercial backbone in impoverished and immigrant neighborhoods across the country.
Like hundreds if not thousands of very small businesses across Miami-Dade, many of those Little Haiti businesses often take cash only and may not have computers or even credit card readers, much less accountants or bank loans. And without a solid credit history or good financial records, they’re unlikely to qualify for the low-interest loans and paycheck-protection payments that make up the bulk of the federal relief program, advocates say.
That leaves them few alternatives for emergency help now that the novel coronavirus pandemic has forced many if not most to shut their doors, putting jobs, businesses and even small landlords at serious risk of going under for good. Even those businesses that, on paper at least, could qualify for federal assistance may not get it or receive it in time — and if they do, it will only win them a short respite.
“We’re talking about people who are their own employees or maybe employ one or two family members,” said Karla Bachmann, director of financial wellness at Branches, a community organization that provides training and support services to so-called micro-businesses. “They may have challenges with technology or language barriers, and they may be newcomers to this country.”
Advisers at Branches have been scrambling to respond to more than 500 requests for emergency help from micro-businesses across Miami-Dade, including in Little Havana and in Little Haiti, where the organization has teamed up with a new small-business-relief fund launched by real estate investor Tony Cho through the Miami Foundation that will provide counseling and “micro-grants” of up to $2,500.
Cho, who owns, sells and manages commercial properties in Little Haiti and the surrounding area, is working with Branches and the Sant La Haitian Neighborhood Center to identify businesses needing immediate help to cope with shutdowns and losses related to the pandemic. The fund received applications from 20 Little Haiti businesses in its first week.
In Little Haiti, Cho noted, Haitian-owned businesses that were already struggling before the pandemic remain vitally important, and not just in economic terms.
“They not only employ people, but also represent a cultural fabric and a history,” said Cho, who seeded the new Little Haiti Small Business Relief Fund with a $33,000 contribution from his Metro 1 and is seeking additional contributions at www.metro1.com/littlehaitistrong.
Among those seeking help from the fund is the one-year-old Bon Gout Barbecue, a tiny corner restaurant in Little Haiti with counter service that quickly earned a devoted following for its blend of Haitian and Southern cooking and feature write-ups in the Miami Herald and the New York Times. But that wasn’t enough when the pandemic hit, forcing a temporary closure whose consequences are looking more dire by the day, co-owner Edward Rawson said.
“We’re not an old and established restaurant, but we had a very decent following for a new restaurant. We tried to stay open for some time when this corona hit,” he said. “But our sales just plummeted once they told people to stay home. We were losing more money than we were making.”
The experience of Rawson and his partners in seeking assistance echoes that of thousands of other small-business owners. They’re something of an anomaly in Little Haiti because they have a relationship with a bank. But that didn’t help much when they applied for a federally backed emergency small-business loan of $10,000 and payroll protection, which would enable them to keep paying their staff of 10 people, including the chef, Miselie Marseille, the mother of partner Wesley Bissaint.
They got no response, and they’re not confident they will get one in time to save the business, Rawson fears. The landlord is demanding payment on their now-overdue rent, which runs around $2,500 a month. They overdrafted their bank account to give employees one last paycheck on a monthly payroll that’s also around $2,500.
“We heard nothing back, not even an email telling me they got [the application]. I called and called and can’t get through,” Rawson said of his bank and the Small Business Administration. “So we are hard and dry. It’s scary to me. I don’t know what to tell the people we owe money to.”
As a last resort, the partners turned to Cho’s Little Haiti fund, hoping a grant will help them stave off bankruptcy long enough to eventually reopen.
“I really need the relief desperately, to get ourselves back in order,” he said. “It’s really sad. Things were going so well. I think Little Haiti was a gentrifying neighborhood and a lot of people were happy to see a Haitian restaurant open. As a business person, the cold-hearted reality is that this will bankrupt us. I literally don’t have the money to pay the bills that we have.”
The survival of small businesses like Bon Gout is critical for Miami-Dade, which is especially dependent on them for jobs and commercial activity.
In a 2018 report, the Metropolitan Center at Florida International University found that nearly 55,000 of the more than 80,000 employers in the county have four or fewer employees. Those small-business employees are also among the lowest-earning workers: People who work in such micro-businesses earned 19 percent less than those working in businesses with more than 100 employees.
But it’s precisely those businesses that federal assistance won’t reach, advocates say.
An article on the Aspen Institute website argues that small and micro-businesses won’t survive without more-targeted assistance to ensure liquidity without burdening owners with loans they can’t repay. Echoing increasing calls across the country, the authors advocate a new program channeling federal assistance to Community Development Financial Institutions, which provide both financing and technical assistance to small businesses in low-income neighborhoods.
One such local institution is the Community Development Fund of North Miami Dade, an outgrowth of the Opa-locka Community Development Corporation founded by former Opa-locka mayor Willie Logan.
The most urgent need for the businesses the fund works with is abatement of mortgage and rent payments, said MJ Green, who oversees it.
“Having to pay rent when they’re not open is eating up these businesses’ reserves,” he said.
It’s one reason why that has been a new focus of the group, as opposed to making loans. Because many borrowers are service businesses and restaurants still unable to reopen, they would not be in a position to spend the loan proceeds, he noted.
That’s the situation facing a Little Havana caterer that asked Branches for assistance, Bachmann said. The operator needs money up front to purchase food when she gets an order, but since there are no orders coming in, a loan wouldn’t do her much good.
For now, the agency will instead provide her technical assistance so that her business will be in a better position to thrive once the pandemic recedes, Bachmann said.
Branches is conducting what is in effect triage with businesses shut down by the coronavirus, she said.
They’re finding that some may qualify for federal assistance, but lack the know-how, English skills or financial documentation to apply. In some cases, especially in those with a sole proprietor whose business is not incorporated, Branches is channeling them into applying for individual federal relief so they can make rent payments in the short run.
“We found out that many need help navigating the system. A lot of them may qualify, but they just don’t even know. They always think they are not eligible,” Bachmann said.
And for those not needing or not in a position to use loans or assistance right away, Branches is providing “wrap-around” service that can mean anything from designing a business plan to accounting and tax help or equipping shops with up-to-date tech like Square cloud-based credit card systems, she said.
Lack of access to tech and accounting services has long meant that many businesses in impoverished neighborhoods like Little Haiti remain marginal in the best of times.
“The goal is to put them in a better place where they will be more resilient in the future,” said Janell Kaplan, senior director of development at the Miami Foundation. “Some of these companies don’t have access to technology. If they are a mom-and-pop that doesn’t have access to Square, that’s a small investment that will go a long way.”
The United Way of Miami-Dade, which is also collaborating on the Little Haiti fund, is adopting a similar approach for its own COVID-19 small-business relief program, which will launch soon, agency spokeswoman Cristina Blanco said. The program will focus on businesses that federal assistance won’t reach.
That’s something the agency has plenty of experience with. The United Way has provided emergency small-business assistance after hurricanes and already works with Branches to foster financial stability for individuals, families and small entrepreneurs.
The pandemic has sharply exacerbated what was already a tenuous financial foothold for many of Miami’s smallest enterprises, Blanco said.
“COVID-19 has created a situation where we know these small businesses are going to be disproportionately affected, and it’s going to take them longer to get back on their feet once this is over,” Blanco said. “This situation already existed. It’s just that now it’s grown by a hundredfold.”
This story was originally published April 11, 2020 at 6:00 AM.