Small business has always played an outsized role in the South Bronx, due in part to lower start-up costs, entrepreneurial energy and the reluctance of large enterprises to invest here.

So small is big in the South Bronx. The average number of employees of Bronx businesses is four, while half of Mott Haven businesses employ two or fewer workers, according to a 2022 study. It is not unusual to find owners stocking shelves, cleaning up, and running the cash register. The average age of a business in Mott Haven is 11 years, although one in six have been around more than 20 years.

Yet small can be precarious. Today many South Bronx mom-and-pops are struggling to deal with several new post-pandemic challenges and many feel stranded as they face woes ranging from crime to inflation, to rising rents and difficulty finding workers. Those that operate brick-and-mortar storefronts, in particular, report steep challenges in securing financial and government support – and dealing with city regulations.

“They’re leaving it on the small businesses to do all the heavy lifting in terms of making the neighborhood feel alive.” — Carlos Cortes, owner of Chocobar Cortes on Alexander Avenue.

During the pandemic, Bronx businesses received only 7% of the $25 billion in federal Paycheck Protection Program loan funds distributed city-wide, and less than 2.3% of city loans and grants, audits by City Comptroller Brad Lander found. Many applied to the $75 million low-interest loan program announced in January by the city’s Small Business Services agency, but the effort stalled a month later, buried under a torrent of applications.

Meanwhile, requirements for such low-interest loans — including having a reasonably high credit score and providing years of tax returns — elude small businesses that operate largely in cash. The lack of access to legal help and relationships with banks can also stymie small businesses.

“I remember even having this discussion with a couple other restaurant and bar owners here in the Bronx,” said Omar Canales. Canales, who oversees operations at the restaurant Seis Vecinos, located on Prospect Avenue, said they had a hard time getting city funding. “They were also just as exhausted, and at the point of, I know I’m never going to get a call. It felt like a raffle.”

In response, in mid-August, the New York Empowerment Zone Corp. announced the allocation of $10 million to offer loans of $5,000 to $350,000 to small Bronx businesses. It will be administered by the Bronx Overall Economic Development Corp.

Most government agencies and their nonprofit subcontractors offer advice and training for starting a business but acknowledge that qualifying for loans can be difficult without a track record. Most entrepreneurs have to start from personal savings or credit cards.

Agencies and nonprofit subcontractors such as the Small Business Development Center at Lehman College and the South Bronx Overall Economic Development Corp. help aspiring entrepreneurs think through business plans, while providing research on potential competition and marketing training.

Yet newer arrivals as well as long-time business owners say the brunt of maintaining a safe, clean and vibrant neighborhood is on their backs. This, despite the existence of multiple city, state and federal agencies and subcontractors whose primary function is to help them.

“Inconsistent coordination and communication between government agencies and local community organizations causes reluctance among merchants to participate in initiatives designed to support the commercial district,” concluded a 2022 report from the Bronx Chamber of Commerce and the city’s Small Business Services agency.

He reached out to the city Department of Transportation to remove the Citi Bike stand that covers half the sidewalk in front of his business, but months of follow-up efforts were unsuccessful. He was told permits for a mural could take years to process.

When he opened the restaurant in 2021, Cortes received funding from the Bronx Overall Economic Development Corp. But he said it’s now difficult to secure city financial aid or other cooperation to ensure the success of his business.

“It feels a bit weird that they’re investing all this money to build out these developments, and we’re depending on the traffic to eventually manifest. Restaurants and businesses make a neighborhood safer.” — Carlos Cortes

Crime is a Prime Concern

Cortes is dealing with more than just bureaucracy. Thieves broke into Chocobar Cortes four times in October 2022 alone, smashing windows and doors, and stealing a cash register.

The morning after one break-in, Gov. Kathy Hochul was holding a fundraiser at Beatstro, a hip-hop restaurant next door, and Cortes took the opportunity to point out broken street lights and gates along Alexander Avenue. “They said, ‘We’re gonna do all of this stuff.’ Nothing ever came out of it,” he said.

According to the 40th Precinct crime report issued on Aug. 8, 2023, robberies and burglaries in Port Morris, Mott Haven and Melrose are up almost 63% above 2021 levels. Since the start of 2023, 372 robberies have been reported, a 9% increase from year-ago levels, while the 175 burglaries reported represent an 18% decrease from year-ago levels.

In an effort to fight back, the Bronx Community Foundation, in collaboration with Assemblymember Amanda Septimo, has created a $1 million fund to purchase security equipment for bodegas and other small businesses. Better street lighting is high on the wish lists of shoppers and diners.

High on Costs, Low on Workers

South Bronx small businesses suffer from some of the same post-pandemic headaches as businesses throughout the city — inflation, rent hikes and worker shortages. But they often face steeper challenges in navigating those problems.

“We’re not a restaurant in Midtown or the East Village, so we always want to cater to our people and not scare anyone away” with major price increases, said Omar Canales of Seis Vecinos.

Labor costs have shot up even amid an influx of tens of thousands of new immigrants who wish to work but are required to wait six months. Meanwhile, more established workers are turning to the growing “gig” economy, toiling for outfits like Uber and DoorDash.

After adapting themselves to e-commerce during the pandemic, many small business owners were stunned when the city lawmakers approved a hike in the minimum wage for app-based food delivery workers to almost $20 by 2025. This came after city and state laws mandating businesses with more than 10 employees to offer a retirement savings plan option to workers. While employers don’t have to contribute, the paperwork and legal costs to comply will be an added burden, business owners say.

“There’s only so many ways to break up that very small margin of profit,” said Michael Brady of the Bronx Chamber of Commerce. Small businesses, he noted, sometimes felt they were not being listened to by those in power, despite contributing one-third of the city’s tax base, or $33 billion citywide.

“There’s a notion sometimes that government is trying to hurt small businesses,” Brady added.

Meanwhile, Bronx storefront rents jumped 14% between 2019 and 2021, according to an analysis of city data by the nonprofit Association for Neighborhood and Housing Development. And the hikes have proved higher for many businesses near luxury apartment buildings rising along the Harlem River. Sam Slim, owner of Ness Sportswear, said rent on his main store in the Hub had more than doubled since 2019.

Some Helping Hands

For decades, South Bronx residents and businesses have found themselves left to look out for each other to make it through difficult times. The pandemic heightened the spirit of mutual aid – both at the business and community levels.

With banks and government financing help remaining scarce in the South Bronx, some longtime business owners have served as unofficial banks to neighboring business operators. As businesses struggled to get online during the pandemic, they shared tips, and they have long purchased goods and services from each other, to keep funds in the neighborhood. Omar Canales of Seis Vecinos said several business owners sometimes gathered informally to compare notes.

South Bronx native William Evans started the grassroots organization Neighborhood Benches to connect young Bronxites with neighborhood businesses and create a network of mentors who can explain the process of becoming business owners, “We want them to know their ideas could be attainable,” said Evans.

New entrepreneurs and those in coworking spaces are also giving each other a hand up. When Eudy Perez celebrated students graduating from her class in makeup, she ordered custom shirts from Ivan Moreira and a fruit platter from Digna Martinez, two businesses operating in her building.

Longtime South Bronx boosters Majora Carter and James Chase are experimenting with another way to help entrepreneurs and spur economic development in the neighborhood.

The husband-wife team, who own the Bronxlandia event space and Boogie Down Grind Cafe, both in Hunts Point, started Hometown Security, a nonprofit that offers a unique type of sublease in two neighborhood buildings to entrepreneurs who don’t have the credit rating most landlords require to rent space.

“A lot of people self-finance on credit cards, they’re in a tenuous position where they’re making money but can’t demonstrate it in a legitimate way,” Chase said. “We reduce the barrier to entry by not having credit card and income requirements, and take a measure of the person’s cash flow in a way that a commercial real estate broker or a landlord wouldn’t.”

Two of the subleased businesses, Umbrella Studios NYC and Hunts Point Exotic Snacks, are run by the same team. The first, a recording studio, has taken off enough to sign a standard lease. The second, a snack shop, recently renewed its sublease.

****************************

A variety of longtime business owners recall when the South Bronx was ideal for their then-new ventures. Commercial rents were relatively low and crowds of customers walked the streets.

But between 2019 and 2021, commercial rents decreased in Manhattan as they rose in the other boroughs — up 14% in the Bronx — according to an analysis of city data by the nonprofit Association for Neighborhood and Housing Development. And finding staff became more difficult as new options opened for workers in the gig economy and elsewhere.

The Bronx received only 7% of the nearly $25 billion in pandemic paycheck protection loans distributed across the city as of February 2021. Only Staten Island, with about a third of the Bronx’s population, got a smaller percentage through the forgivable loans program.

Nonetheless, as new e-commerce entrepreneurs emerge, many South Bronx legacy business owners appear to be holding steady, with little visible help from the government. Their rents have soared, as have the cost of the goods they market. Still, at least some have found their loyal customers are willing to absorb modest price hikes.

We visited businesses and talked with owners about their challenges, their successes — and the future, which is more tenuous for some.

“If I wasn’t in business for 35 years, I wouldn’t be able to stand today.”
— Jimmy Azizo, Suit Factory

Hanging by a Thread

Sam Slim, the owner of Ness Sportswear, operates three stores around Third Avenue and 149th Street. He sells casual clothes, including jeans and T-shirts of every color. Some 30 years into running his “old school” business, Slim says, “It’s really hard right now.”

Slim said the rent on his main store was initially around $7,000 and is now around $15,000 per month.  Since the start of the pandemic, he has had five rent increases and now pays $37,000 on his three stores.  Depending on how the “back to school” season goes, he said, he might have to consolidate locations.

Even though he received two loans during the pandemic, Slim said now he needs to “just survive to continue working. I have no choice.”

Despite data showing that consumer spending in the Bronx Hub now exceeds pre-pandemic levels — it’s up 59% — Slim said he feels the impact of customers’ penny-pinching.

“People don’t wanna spend $100 if they can spend $40,” he said, noting that some of his brand-name merchandise isn’t cheap.

“Now I don’t think it’s worth it to have this kind of business,” Slim said. “If I was younger, maybe.”

He wondered whether the Business Improvement District serving the Hub was still in existence. (It is, but currently operating without leadership.) In any case, “Sometimes if you have any issues, complaints, or problems, they cannot do anything. They can’t make any decisions just to help you out,” he said.

Down to One Shop

Jimmy Azizo recently closed two of the three Suit Factory locations he owned prior to the pandemic. The shop at 315 E. 149th St. is the only one left.

At his remaining outlet, rows of dress shirts, pants and jackets hang along the walls, on floor racks and on large tables. During a recent visit, just a couple of customers were browsing.

Azizo, originally from Egypt, has lived in New York since 1981. Over the years, he has witnessed a lot of change, but never more than since the height of the pandemic.

The 62-year-old New Jersey resident sees the shift to remote work — and to casual clothing — as the beginning of the end of his business.

Many workers ditched their suits and never looked back. According to census data, the number of people working primarily from home tripled in the U.S. between 2019 and 2021 to almost 27 million.

A survey by the software transcription company Otter.ai showed that 30% of Americans working from home during the pandemic wore pajamas during virtual meetings and throughout the work day. Even NBA coaches have made headlines for their casual looks, often opting for polos and zip-up jackets with team logos.

And the iconic suit company, Brooks Brothers — feeling the pain even pre-pandemic — filed for bankruptcy in 2020.

Azizo also worries about the impact of fewer workers commuting and stopping in the neighborhood for a soda or lunch.

Azizo credits his longevity in the neighborhood to keeping him barely afloat. “If I wasn’t in business for 35 years,” he said, “I wouldn’t be able to stand today.”

Barbershop Stays a Cut Above

Brian (“Bee”) McFadden is one legacy entrepreneur whose key to success lies in sticking to the script that worked for his father.

McFadden opened Bee’s Famous Barbershop on East 138th Street and Cypress Avenue in 1997. His late father operated a barbershop next door in the spot that now houses the restaurant Pio Pio.

McFadden’s shop is something of a relic, with a Frutopia machine in the corner and a poster promoting a “Ladies of Hip Hop 1999” calendar. Hanging on the mirrors and walls are dozens of faded photographs and pictures of ’90s-era Michael Jordan and Knicks players. The benches and floors are cracked and peeling.

The door is wide open and many passersby pop in for a hug, handshake or a brief chat — and often all three.

McFadden, now in his mid-50s, started his own barbershop on Brook Avenue but moved back to Cypress Avenue as soon as the spot became available.

“I have at least third-generation, fourth-generation clientele,” he said. “So I was already here, and I’ve been in this neighborhood. I know a good amount of people in the neighborhood. It just made sense.”

Over the past 26 years, McFadden said his rent has doubled and the Con Ed bill has tripled.

To help cover these increases, he recently raised prices for the first time in about 20 years. McFadden said he used to charge $15 for a men’s cut. He now asks $25. Still, he noted that many other shops charge $35 to $40.

“I’m still fairly cheap,” McFadden said. “I go according to my neighborhood. I don’t want to put a lot of strain on my customers.”

McFadden said he’s maintained the business and kept prices low for decades, with no help from nonprofits or city agencies. He relied on savings to start the business. And during the pandemic, he said, he was rejected for Paycheck Protection Program loans three times, despite being mandated to close for four months.

McFadden said the only time he heard from the city was when inspectors stopped by to monitor his shop for compliance with pandemic restrictions.

Still, McFadden found that loyal customers were eager to come back. The space he rents is old, and he said he will soon be covering the costs of repairs to the ceilings, walls and floors.

He lives by an old saying: “You should work twice as hard for yourself as you would for someone else,” he said, adding, “You have to in order to stay afloat.”

And while costs have gone up, little about the core of McFadden’s business has changed since he first opened.

“I try to stick to a lot of my old ways,” he said, “because they work.”

****************************

If you’ve shopped in the South Bronx along Third Avenue, Southern Boulevard or Bruckner Boulevard, you may have seen crews sweeping outside, watering and pruning plants, painting over graffiti and just walking the streets.

Street teams like these, employed by organizations like the Third Avenue Business Improvement District, operate with a goal of supplementing city services and adding to a sense of safety on the streets.

The South Bronx is home to the Third Avenue BID and Southern Boulevard BID, nonprofits dedicated to supporting small businesses owners in a neighborhood that still boasts many mom-and-pop shops and relatively few chain stores.

In the wake of the pandemic, both BIDs have operated for months under no leadership and on meager budgets, leaving most entrepreneurs to go it alone. In June, the Southern Boulevard BID hired Jay Medina, formerly of the Third Avenue BID, as its CEO. 

When Michael Brady stepped down as CEO of the Third Avenue BID on March 15, a press release said a search for new leadership was under way. However, no one has been hired to replace him and multiple calls to both BID offices went unanswered and emails bounced back.

Business landscape in Mott Haven

Source: NYC Small Business Services, Mott Haven Commercial District Needs Assessment  

What Is a BID?

Business Improvement Districts, or BIDS, are standalone nonprofits that collect special assessments, akin to an added tax, from business owners and provide services. Although BIDs work closely with city officials, they are not government agencies.

“BIDs will always exist for as long as the property owners want them,” Brady said, noting that owners could also elect to stop paying the assessment, dissolving the organizations — a development that appears to be underway in the Westchester Avenue BID further north.

The typical business owner — with a 25-by-100-foot lot — within the area covered by the Third Avenue BID pays around $100 per month as a tax add-on for BID services. The city  Department of Finance collects the funds and delivers them to the Small Business Services agency, which distributes them to the BIDs.

BIDs are “public-private partnerships” born out of the 1970s and ’80s fiscal crisis. With the city unable to keep up with public safety, sanitation and other services, BIDs were developed to fill the gaps. They have the advantage of being more nimble than the government, because they can address pressing needs more immediately and are more familiar with local businesses.

Following a mantra of “clean, safe and beautiful,” BID duties range from providing supplemental sanitation and public safety services, to keeping shopping areas spiffed up and overseeing marketing and public events to draw customers. They also provide direct services to business owners — including real estate advice, marketing and assistance in negotiating leases.

Tight budgets limit BID effectiveness

Joey Cohen has co-owned Gallery 2000, a jewelry, clothing and tattoo shop across the street from his local BID office for about five years. Business, he said, is “pretty much not bad,” noting that during the pandemic the shop benefitted from customers with extra disposable income.

But Cohen’s rent has more than doubled, to $20,000 per month since opening his doors. Efforts to convince the landlord to lower it have failed. BIDs can help business owners in these kinds of negotiations. But trust is paramount in such circumstances, and Cohen said his partner is often skeptical of outside help and “doesn’t like to work with someone he doesn’t know.”

The Third Avenue BID has been unique for its public health program, which trained staff as well as residents in CPR and in using Narcan to counter drug overdoses. The BID’s sanitation crew saved dozens of lives one summer, Brady said.

The challenge of finding new BID leadership in the South Bronx is compounded because the model is not financially viable in less wealthy communities — often those with higher needs.

The Third Avenue BID budget of $1.4 million puts it in the same spending category as BIDs in Chinatown, Madison Avenue and 125th Street — far larger operations. The Southern Boulevard BID’s budget of under $250,000 makes it among the smallest in the city.

But only $450,000 of the Third Avenue BID budget in 2021 came from assessments. The remaining $950,000 was generated from fundraising and grants. Even that impressive level of external funding wasn’t enough to cover all expenses in 2021, putting the BID underwater, according to the 2021 BID Trends Report published by the city’s Small Business Services.

Brady said he hadn’t taken a paycheck between October 2022 and March 2023 when he left, and had never received health insurance because budgets were so tight.

Business landscape in Hunts Point and Longwood

Source: NYC Small Business Services, Hunts Point & Longwood Commercial District Needs Assessment

‘A Sense of Community’

In contrast with the 11 BIDs scattered around the Bronx, the Bronx Chamber of Commerce is a voluntary organization whose 450 member businesses pay dues.  The chamber performs some of the same advisory services as the BIDs but also provides significant training and networking opportunities — and is active in policy and legislative discussions not open to BIDs.  Dues are supplemented by government and private foundation grants.

Despite the underfunding of the BIDs, and the sense that they need more of a voice in government decisions affecting their members,  Brady — the owner of Bar 47 on Bruckner Boulevard — remains enthusiastic about the South Bronx as a great place to start a business. Commercial rents are still relatively affordable, and the intangibles go a long way, he said. 

“Our people, our culture, our energy are unmatchable,” he said. “There is a sense of community, of helping, that kind of transcends business.”