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Two Years After 9/11

Several hundred "invisible" small businesses and nonprofits that suffered severe economic shocks from the September 11, 2001 World Trade Center attacks remain in operation today due to the largely unrecognized work of "community development financial institutions" (CDFIs), according to a major new report from the National Community Capital Association.

Entitled "Two Years After 9/11: A Report on the Unique Role CDFIs Are Playing in the Rebuilding of Lower Manhattan," the new analysis documents a total of 3,093 post-9/11 financial transactions-loans, grants, and wage subsidies-distributing more than $49 million to underserved groups that missed out on the historic outpouring of government, private, and charitable aid after the attack on the World Trade Center. Citibank supported the research and writing of the NCCA report with a grant from the Citigroup Foundation.

CDFIs are financial institutions that work just outside the margins of conventional finance to bring underserved and distressed markets into the economic mainstream and to bring the economic mainstream into those markets. In addition to being small, many CDFI borrowers are owned and operated by women and people of color. Nationally, CDFIs have provided more than $10 billion in financing with consistently low losses and high impact.

"While millions of Americans, along with New York City, New York State, and the federal government mounted a relief and recovery plan unparalleled in history, community development financial institutions played a critical and little understood-role in assisting and revitalizing Lower Manhattan in the two years since September 11th," says National Community Capital Association President and CEO Mark Pinsky. "CDFIs led the front-line response to help thousands of otherwise 'invisible' small businesses and nonprofit organizations survive and thrive in the aftermath of the September 11th attacks. But the true successes of this story are the small businesses and nonprofits in Lower Manhattan that prevailed despite enormous difficulties. They helped keep the Lower Manhattan economy going, people employed and vital products and services flowing."

According to Citibank Community Development Director Andy Ditton, "CDFIs were key partners with us after September 11th. We provided grants and loans to CDFIs because we knew they could get the capital to those organizations that are hardest to serve. CDFIs were also a key referral source for Citibank's 9/11 efforts. Citibank is very proud to be able to support this important network serving America's most distressed communities here in New York City and around the U.S."

The NCCA report documents a half dozen examples of "invisible" small merchants and nonprofits that most likely would not have survived the 9-11 aftermath without CDFI help. Among the examples:

• Robert Garber started Bits, Bites and Baguettes in 1997, a restaurant that had a brisk walk-in lunch and breakfast business and a catering business. On September 10, 2001, Bits and Bites had its busiest day ever and for the year revenues were up 35% and staff had quadrupled. After September 11th the business was barricaded for two months. At re-opening customer traffic had slowed dramatically. Garber attended an information session that Seedco held on October 31, 2001 and was the second business to receive assistance through Seedco's Lower Manhattan project. The business was awarded a grant of $25,000, a wage subsidy for 10 employees, and a loan of $100,000 on November 19, 2001. Garber used the grant and loan proceeds for working capital purposes, such as paying rent and utilities, replacing inventory that had been destroyed, cleaning the restaurant of soot and debris, paying suppliers that he was unable to cover during his period of closure, and paying his employees. Since then, Garber has been able to rebuild the business to the pre 9-11 levels and open three new locations in Lower Manhattan which created more than 25 jobs. Seedco provided an additional $100,000 loan to help finance the start-up of two of Garber's new businesses. "Seedco was absolutely the first source of funds," says Garber. "They were very helpful and supported our staff."
• Betances Health Center, a nonprofit health care provider located about a mile from Ground Zero, experienced a sharp drop in patient volume and incurred many unexpected expenses after 9/11. Betances had to use cell phones, message centers, and call forwarding services until its regular phone service was restored in late November 2001. Betances serves a multi-ethnic population by providing integrated care that merges Western medicine with treatments consonant with the diverse health care beliefs and practices of their clients. Primary Care Development Corporation (PCDC), a CDFI located just blocks from Ground Zero, works to expand access to primary health care for New York City's underserved. PCDC helped secure a $300,000 grant from Nonprofit Finance Fund, and $50,000 from the Commonwealth Fund. These grants enabled Betances to cover lost revenue, meet its obligations and hire outreach workers to encourage participation in Disaster Relief Medicaid.
• Mohammad Alam is a street vendor who sold children's books a few blocks from the World Trade Center site. The day of the terrorist attacks, Mohammad briefly left his stand to pick up more books at a nearby storage space. On his way back, he watched stunned as the first tower collapsed. "Seven days later I was allowed to come back to my stand," remembers Mohammad, "but everything was gone." Mohammad lost the majority of his inventory that day. Although he soon reopened for business, he struggled for weeks to earn enough to send money to his wife and children, who live in Bangladesh. One day an ACCION loan officer told him about the American Dream Fund. Mohammad applied for the loan and soon had the $5,000 he needed to replenish his inventory. "I give 110 thanks to ACCION," he says, "because I would not be here if they didn't help me."

Lower Manhattan lost more than 100,000 employees to death, relocation, or unemployment as a result of the terror attacks. The NCCA/Citibank study looked at CDFI distribution of $48.6 million in loans, grants and wage subsidies to businesses and organizations in New York affected by September 11th. The types of clients served by CDFIs, however, typically were those most difficult to serve. They included nonprofits that required assistance in assessing their losses, and small business owners that did not speak English, did not have collateral, or did not have the capacity and resources to complete government applications. A total of $44 million-or 90% of the CDFI activity analyzed in the study-was in Lower Manhattan below 14th Street. The average loan size was $32,229. The average grant size was $14,025.