Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for August 11:
- Number of small business closures staggering yet uncounted
- Government cracks down on unscrupulous lenders targeting small businesses
- NYC offers legal aid for SBOs unable to pay the rent
Number of small business closures staggering yet uncounted
“I felt it better to close with some money in the account and not have to worry about bankrupting the business.”
When big corporations file for bankruptcy, it’s headline news. When small businesses close their doors, does anyone notice? Even as economists warn about the staggering economic toll that the “silent wave” of pandemic-related small business closures will have on the economy, they note that few people are actually tracking the number of small biz closures in real time.
Yelp, the online review site, notes that approximately 80,000 U.S. businesses closed between March 1 and July 25 of this year, but it’s difficult to truly gain a more accurate count since many small businesses do not actually file for bankruptcy, they simply shut the doors and turn off the lights.
Government cracks down on unscrupulous lenders targeting small businesses
“It almost seems like it is a gangster operation.”
Businesses looking for ways to keep the lights on for another month often make an easy target for unethical lenders, however. In response, state and federal authorities are cracking down on the growing number of lenders offering high-interest loans and using shady collections practices to make business owners pay up.
These merchant cash advance companies provide funds to SBOs based on current revenues. When revenues dwindle and borrowers can’t pay, the lenders attempt to freeze assets, further compounding the SBOs trouble. Since these lenders aren’t technically banks, they’re typically not subject to intense scrutiny or regulation.
NYC offers legal aid for SBOs unable to pay the rent
“What it meant was, overwhelmingly, small business owners of color and women-owned small businesses, immigrant-owned small businesses benefited.”
New York City is dedicating $1.5 millions to the Commercial Lease Assistance Program, an effort to connect struggling small business owners with legal aid to help resolve lease-related problems and disputes.
The program has had great success in the past, with over 900 cases resolved. Legal assistance is offered in a variety of languages and minority and female business owners in particular have benefitted from the program.