A $10M fund announced to finance small businesses in the Bronx

A $10 million loan program targeted at small to medium-sized businesses in the Bronx was announced last Thursday at the Bronx Kreate Hub by the borough president, local electeds, and economic development leaders.

“We’re launching a $10 million community advantage loan fund for businesses in the Bronx,” Rob Walsh, president of the Bronx Economic Development Corp., announced to large applause.

The Community Advantage Loan Program will oversee loans ranging from $5,000 to $350,000 with proceeds to go to things like payroll, inventory, and new equipment. The funds have a focus on the South Bronx, with particular consideration given to businesses in the Bronx Empowerment Zone.

“The program prioritizes the underserved,” U.S. Rep. Ritchie Torres said at the event. “Sixty percent of these loans must go to businesses in underserved areas.”

The $10 million in funds, which was originally granted in 1994, created to help small businesses to stabilize and grow. When Bronx borough president Vanessa Gibson appointed Walsh as president of the BxEDC, he explained to her how the money had been left on the table unspent. Under Walsh’s leadership, and Torres’ pressure, they were able to tap into the money and put it into the Community Advantage Loan program.

“We often say the Bronx is a borough of opportunity,” Gibson said. “It is a global destination. From our historic landmarks, our cultural institutions, our institutions of higher education to all of our small businesses that are the fabric and foundation of our borough. We celebrate that.

“We are no longer going to be first in everything bad and last in everything good. We are turning the tides, we are shifting the conversation.”

Gibson said that it was unacceptable that during the pandemic less than 10 percent of Bronx businesses were granted federal paycheck protection program loans, despite that those businesses were kept open as essential businesses, keeping residents employed and providing services.

“None of it is possible without our small businesses,” Gibson said. “The lifeblood, the fabric, the foundation of our communities, our legacy businesses, generations and generations of family that have kept their doors open.”

According to Congressman Torres, the federal government guarantees up to 85 percent of the value of these loans. Torres said that two of the common concerns from small businesses in the Bronx is a lack of access to capital and “the crushing cost of doing business at a time of historic inflation, rapidly rising interest rates in a city as expensive as New York.”

“In the United States, there is a severe shortage of small business lending,” Torres said. “And nowhere is the shortage more severe than places like the Bronx, where small businesses are often left behind. The larger banks have an incentive only to hand out loans to larger businesses that will generate larger returns. And a big banking system that favors big business will often overlook the small businesses of the Bronx.”

Torres, similarly to Gibson, brought up the federal Covid loan program, saying the Bronx only received 7 percent of the PPP loans in New York City. As for the city Covid loan program, the Bronx only received 2 percent compared to the 57 percent Manhattan received. To not repeat the same situation, Torres and other public officials teamed up to “fill the gaping hole” in small business lending.

For Elizabeth Lusskin, executive vice president of Small Business and Technology for the NY Empire State Development Corp., getting the loans was personal, having been a business owner herself.

“Small businesses, as was mentioned, are about creating opportunities,” Lusskin said. “And for many owners from small business owners like my grandfather it was the path and is the path to the American dream.”

Rafael Roger, executive director at Business Initiative Corp., said they are considering looking at private foundations, fundraising, and that this is just the beginning. They want the loans to continue to cycle through as they’re paid back.

To qualify for such loans, a business has to be designated as small. So, just what is small?

Walsh said that if there’s a business that has 100 or 200 employees that needs capital and equipment, they’ll be right there to help.

Several small businesses in Riverdale were not yet aware of the $10 million fund when asked about it. Richard Berroa, owner of Claudy’s Kitchen with his wife, Claudia, said he plans on applying for a loan. What was appealing to him was the interest rate, saying “you can’t beat 2 percent.”

“Just having the money,” Berroa said. “Having the flexibility, money equals freedom. It gives you more power to implement what you want to do.”