Report Shows Credit Crunch Close To Home
A study released this week says that small businesses in Queens are feeling the pressures of the credit crunch more than anyone else in the city, and that is true especially of small businesses in Rockaway, the backbone of the peninsula's economy.
The study, prepared for Congressman Anthony Weiner by the United States Small Business Administration (SBA), says that Queens small businesses have borrowed 45 percent less from creditors this year, totaling more than $48 million in drop-offs from last year.
This is the largest decline of any borough in New York City, the report says.
The city as a whole experienced a 40 percent decline in the number of small business loans from 4,011 in 2007 to 2,427 loans this year.
The reason for the rapid decline, according to the study, is struggles of lenders nationally to free up credit for small businesses. As a result, many borrowers have seen their lines of credit reduced and in some rare cases eliminated, which makes it harder for businesses to keep revenue streams stabilized and meet payroll for employees.
Rockaway Chamber of Commerce President Alan Camhi says businesses in the area are feeling the pinch, primarily because Rockaway commerce consists mainly of small businesses with the exception of a few chain drug stores and fast food restaurants.
"People are going to go where the deals are better," Camhi said. "Small businesses can't keep up with large retailers who buy in huge quantities, and are then able to sell their goods drastically cheaper."
Camhi further explained that Rockaway suffered from these difficult economic times almost immediately because, unlike some other communities, it doesn't have large retailers to keep the local economy thriving.
The owner and operator of Condor Pest Control, Camhi has been noticing that demand from his regular accounts has not been as frequent as in times past. He says that people are realizing his service may not be a necessity in any given month and that people will cancel their appointments if they need to spend the money elsewhere. "People are not willing to spend more than they have right now," he stated.
As a result, he says, the restaurant industry has really taken a major hit as people are resorting to cheaper alternatives than eating out. When that happens, he says, restaurants are forced to slash their prices and offer specials, which create a minimum amount of profit. Several restaurants refused to comment on the state of their business.
Small businesses along the peninsula were hesitant to discuss how their particular business is doing and many even declined to comment altogether. However, of the few that did, none said that they have seen a reduction in their business' line of credit or the particular amounts they have been borrowing. Times are just slow for a lot of places.
Spence Haig, manager of Attixx One Furniture in Rockaway Beach, says business is not horrible but is definitely down.
"I think the people who need credit right now aren't getting it and that is hurting businesses," he said. "Things were definitely better two or three years ago, but we're not having any trouble getting credit for the business."
Another specialty company, Dart Awnings in Rockaway Beach, like Camhi's business, Condor Pest Control, has seen things slow down as people put off those home improvements to take care of other necessities.
Tom Hart, an employee, admits that usually the winter months are slow for the company regardless.
"We're used to being slow in the winter so it is hard to tell, but in the spring and summer we did OK, but not as good as other years."
Congressman Weiner, upon learning the results of the study, is urging the Federal Reserve to establish a temporary lending facility. He says that doing so would restore vital liquidity to the financing markets and also allow SBA lenders to replenish their funds, jumpstarting the small business credit pipeline.
That would be good news to the overwhelming small business population along the entire Rockaway peninsula.