Mr. Kevin S. Law
State Director, New York State Small Business Development Center
TESTIMONY FROM THE LONG ISLAND ASSOCIATION
BY KEVIN S. LAW, PRESIDENT AND CEO
TO THE UNITED STATES SENATE COMMITTEE ON SMALL BUSINESS & ENTREPRENEURSHIP
December 13, 2012
Chairwoman Landrieu, Ranking Member Snowe, and other Senators of the committee, thank you for the opportunity to be with you today. I would also like to thank my home state Senators, Chuck Schumer and Kirsten Gillibrand, who are true advocates for New York State and our country.
My name is Kevin Law. I am President and CEO of the Long Island Association (‘LIA’), which is the leading business organization in the Long Island metropolitan region. The LIA's membership is comprised of small and large businesses, technology and manufacturing companies, universities, financial service firms, banks, credit unions, hospitals, media companies and sole proprietors which together employ two-thirds of Long Island's workforce. Our mission is to lead the region's economic development and bring together disparate factions within the community to forge regional solutions for Long Island.
The Long Island economy is made up of over 100,000 businesses and 90% of those businesses employ 20 people or less. Thus, small businesses are clearly the backbone of the Long Island economy.
Superstorm Sandy had a devastating impact to Long Island, including: hundreds of millions of dollars in damage to our roads and rail system, a record-setting 945,000 residential and commercial customers who lost power (which is more than 90% of the entire grid), nearly 100,000 individual homes affected by a flood surge of nearly 15 feet, and breaches to our barrier beaches. No storm of this size has ever hit a region as densely populated as ours. The wrath of Hurricane Sandy extended to the business community. Tens of thousands of small businesses lost power for weeks, which resulted in lost sales and many small businesses were flooded and damaged beyond a simple repair. Small businesses that were already struggling in this slow and bumpy economic recovery now question whether they can still survive and remain open for business.
We thank the efforts and hard work of FEMA and the Small Business Administration. These two federal agencies have been on the ground on Long Island since Sandy hit, doing everything they can to help us recover. In fact, I was with the Administrator of the SBA, Karen Gordon Mills and Congressman Steve Israel this week who held a forum for small businesses at our office. She spoke to small business owners about the resources available to them to help recover from Sandy and took their questions.
While the SBA has made available to the business community those resources which it legally can, some changes may be warranted. Many stores, restaurants and small businesses throughout Long Island were damaged and some even destroyed. However, almost all the federal money that is available to small businesses is in the form of loans. After this storm and in this economy, small business owners are resistant to taking on more debt. Most of the money lost by small businesses can never be recovered. If you are a homeowner, you may be eligible for a grant from FEMA. But if you are a business owner, your only federal option is an SBA loan. This has to change because those that do not get back to business fast may find themselves unable to ever open again.
Small businesses, often living week to week, have fewer reserves and are more dependent on daily cash flow and thus rebuilding on loans alone is problematic. Thus, I urge you to consider expanding FEMA’s grant program for individuals to include small businesses or to enhance the SBA’s programs so that it includes grants to small businesses as well.
Although grants to small businesses would go a long way to help them survive, the availability of loan funding is still vital. Small business owners have only 60 days after a natural disaster to apply for a low-interest loan to make repairs, purchase merchandise and pay for other work necessary to reopen. The deadline for small businesses to seek recovery aid was recently extended to January 28, 2013, and that is good news. We are concerned businesses impacted by Hurricane Sandy have not yet applied for assistance. The most recent data published indicated that the SBA had approved about $3 million in loans to 31 Long Island businesses. This seems low given the high numbers of businesses impacted. Many business owners are still regrouping to get their lives and businesses back to normal and have not had the opportunity yet to apply for aid, or they may still be unaware of the resources available to them. It is reasonable and essential that FEMA and the SBA remain flexible on the final deadline so we are certain everything is being done to boost small businesses.
Senator Chuck Schumer recently proposed new legislation that would also aid small businesses in the aftermath of Hurricane Sandy. The bill would allow full tax deductions for cleanup expenses, give damaged small businesses a tax credit for keeping employees, allow businesses to use bonus depreciation for capital expenditures associated with constructing commercial properties and residential rental properties and authorize states to issue tax credits for individuals and businesses affected by the storm. These are important proposals that would bring great relief to the small business community.
Additional federal efforts could also include recognizing businesses that may not have suffered physical damage from Hurricane Sandy but rather extraordinary losses of revenue due to power failures and missing customers. Many small retail businesses and restaurants made no revenue in the weeks after the storm because so many other people were unable to travel to or actually work at their offices. Currently, most businesses are ineligible for any kind of federal storm relief. The storm recovery funding that is approved by Congress should have some flexibility in it so the states and local governments can adequately respond to small businesses who may never recover their substantial numbers of lost sales.
Hurricane Sandy devastated our region. While FEMA and the SBA have done a tremendous job coming to the rescue of the small business community, more could be done to ensure their long-term viability. Thank you for allowing me the opportunity to testify today and I respectfully urge you to consider our recommendations during your deliberations.