Caribbean Businesses Facing Tough Times Consumer Confidence Falls And Economic Future Uncertain, CACCI President Says Businesses Are Hurting

By Tony Best

Caribbean business in New York, whether in real estate, construction, travel or retail services are facing some of their toughest times.

  And although it isn’t clear how many have actually folded, a survey of Caribbean-owned enterprises in the City and on Long Island indicated that some are holding on by a shoestring, others are dipping into their owners reserves to keep the doors open while yet another group is cutting back by reducing staff and holding the line on operating expenses.

These are tough, very tough times, said Dr. Roy Hastick, President of the Caribbean American Chamber of Commerce and Industry. Many small businesses are not getting credit to meet their payrolls and those in retail are facing the real situation in which consumers are shopping less and holding onto their savings. The lack of confidence in various financial institutions is adding to the overall poor business climate. What is worst is that there is no immediate end in sight to what is happening.

John Garry Edwards, who owns and runs Affordable Credit, a mortgage brokerage firm in Brooklyn, couldn’t agree more.

We are in the real estate business and while there are properties to be sold at much reduced prices than say a year or 18 months ago, the credit market has toughened considerable and many of us are simply holding on for our dear business lives, was the way he put it. I am not sure how long many of us can continue like this. Some companies have already closed their doors and don’t be surprised if more follow that trend. Yes, potential buyers can pick up properties at reasonable prices, but the banks have imposed very tough restrictions on mortgages and the question is who can get them.

Natasha Nigro, a mortgage banker, voiced a similar worry.

Some have already gone out of business and the prospects aren’t bright for many others, she asserted. most devastating aspect of the business picture was the drying up of credit for small enterprises in the City.

It is having a deleterious impact on the cash flow because the businesses are having a hard time meeting their payrolls,he said. What’s interesting about all of this is that we at the Chamber realize that many operators of small firms are hurting but they aren’t talking about it openly, preferring to keep it quiet. In some instances, it is a matter of pride and in others they just don?’t know what to do.

Small wonder, then, that U.S. Senator Chuck Schumer is urging the U.S. Small Business Administration to step in with loan-financing for firms that are feeling the financial pinch.

Edgar Henry, who owns ENG CaribbeanVisionCenter on Brooklyn’s Flatbush Avenue , used the word crisis to describe the state of small businesses in the City as he ponders when the dreadful conditions would end.

The present picture is tough and the future isn’t bright at all for small businesses, including those owned and operated by people from the Caribbean, he said. Some have had to dip into their reserves and it is particularly onerous for the mom and pop operations which have only one business on which to rely for their survival.

They are tightening the screws to stay afloat. Some have to do extra-ordinary things like going without pay, down-sizing an already small operation just to be able to pay their monthly basic fixed costs. When will it end It’s all left to be seen because this is an election year. We shouldn’t forget the war is still on in Afghanistan and Iraq and the country is spending billions of dollars every month, some of which could be going into taxpayers pockets so they in turn could spend on the things they need.

With many workers being forced to forego salary increases or accept minimal raises at a time of rising inflation, consumer purchasing power is declining, and that, and that said Henry, was adding to the woes of small operations.

The same money now must be used to help pay for the sky high fuel prices and for food as well as other basic necessities, he added.

Edwards said that the housing market had toughened considerably in recent months, so much so that banks and mortgage finance companies had taken large numbers of potential buyers out of the loop by heightening qualifying credit scores and demanding second evaluations to ensure that homes were being bought at realistic and not inflated prices, beyond people’s ability to pay.

What’s happening now is that you get an appraisal for a property and the banks are getting second appraisals just to confirm that the market price is reality, he said. So many people are behind on their mortgages that the picture is not a pretty sight. Although people are working their utility bills have gone through the roof, they are unable to meet all of their obligations and can’t afford unplanned expenses. Day-to-day survival is extremely difficult for people just to maintain their homes. Some owners may have taken out a home equity loan to improve the property and now they are finding they are over-extended and that fact is spilling over into our businesses. The average consumer didn’t see this coming.

Edwards, who described himself as a middle man in the mortgage finance business is waiting anxiously for Washington’s new regulations that would govern the operations of Freddie Mac and Freddie Mae the housing firms which were recently taken over by the Federal Government to ensure their survival in the new business environment.

Our area of business is really at a crossroads with only a handful of banks now offering mortgages and so many in this business will not survive, he said. As a matter of fact some have already shut down. The banks are scrutinizing your operations on a monthly basis and if you are not providing the business they require you are just eliminated, taken off their lists. It’s as cruel as that. We have seen in recent weeks some of the large banks that used to be in the mortgage industry taken over by others and that's having a negative rippling affect on our business.

For her part, Nigro said that despite having a lot of housing business to handle the stringent mortgage conditions means I can’t do anything with what I have before me. It is very tough.

The mortgage banker’s husband, Scott Nigro, a credit counselor on Long Island, sees the situation first hand from the consumer’s side of the story.

Individuals are really in a jam, he said. Everything these days depends on your credit score. Firms are hiring after checking your credit history. Landlords too are looking at credit scores before renting an apartment. When you shop for insurance it can be determined by your credit history, not your driving record. Even promotions on the job can be linked to credit. So, when you fall behind or lose your property through foreclosure you can be facing a grim situation. Credit now affects everything as you seek to move forward in life.

 

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