The Impact of COVID-19 on Small Businesses

By Divij Jain ’21

NYC's small businesses have been hit the hardest by COVID-19 (Photo Credit: Eli Diker '23)
NYC's small businesses have been hit the hardest by COVID-19 (Photo Credit: Eli Diker '23)

New York City has always been a center for thriving small businesses. In New York City, 98% of businesses employ 100 people or fewer, and 89% employ 20 or fewer. The city’s ever-growing population, status as one of the biggest tourism hubs in the country, and diverse set of industries have allowed small businesses to succeed.


The greatest challenge facing small businesses in New York City has always been constantly increasing rent—that is, until New York City became one of the worst COVID-19 hotspots in the world.

On March 9, Governor Andrew Cuomo of New York declared a state of emergency as the state reached over 100 cases of COVID-19. As the number of cases in the state quickly grew to over 1,000, between March 16 and March 21, the city mandated non-essential businesses to close their doors to the public and restricted restaurants and bars to take-out only. These new regulations had the most detrimental impact on small businesses, especially those without an online sales component, as the loss of revenue only exacerbated the high cost of rent. In April, Gregg Bishop, commissioner of the New York City Department of Small Business Services, announced that projections showed that up to 40% of small businesses could fail as a direct result of the pandemic. The concern of small businesses failing grew larger across the country, prompting Congress to agree on a $350 billion stimulus package for small businesses impacted by COVID-19 on April 3. Following the announcement of the stimulus package, City Councilman and chair of the council's Committee on Small Business Mark Gjonaj stated his concerns about the package: “I don't believe $350 billion, which is a lot of money, is going to be enough.” Unfortunately, his concerns were soon verified when less than two weeks later, the stimulus loan program ran out of money. By the end of May, according to Governor Cuomo, over 100,000 businesses in New York State had shut down permanently since the beginning of the pandemic.


New York City and State officials quickly worked on developing a business reopening plan in order to protect citizens from extended exposure to COVID-19 and protect businesses from permanent foreclosures. New York State had provided loan options for small businesses, such as the New York Forward Loan Fund, which provided a loan of up to $100,000 to companies with 20 or fewer employees, but as loan applications started overwhelming the state government, it became clear that the only way to save New York’s businesses was to implement a reopening plan.


On June 8, the first phase of the business reopening plan began, and select operations in construction, manufacturing, and retail delivery and pickup were allowed to partially reopen. The second phase followed on June 22 with the resumption of outdoor dining and in-store retail, as well as the reopening of offices. On July 6, the city entered the third phase, which consisted primarily of the reopening of personal care services such as nail salons and tattoo parlors.


While the partial reopening of businesses has created a new sense of optimism for store owners and employees alike, the city will continue to experience the lasting effects that COVID-19 has had on its businesses. In addition to the hundreds of thousands of companies that have already permanently closed, it is likely that those who remain will close or shrink considerably in the following months due to the three months of lost revenue and, for some, being forced to repay stimulus loans that they cannot afford. Additionally, according to the Association for Neighborhood and Housing Development, 48% of New York City’s small businesses are run by immigrants, so the city’s immigrant population will disproportionately experience the long-term effects of the pandemic.


It is impossible to predict when the city’s businesses will reopen completely, but until then, small businesses will continue to bear the brunt of the COVID-19 pandemic.