Bad year for small businesses in San Francisco
By: Erin Sherbert
Examiner Staff Writer
January 24, 2010
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Out of business: Storefronts stand vacant along Chestnut Street. Pummeled by the recession, small businesses closed in San Francisco in 2009 at a quickening pace. (Cindy Chew/The Examiner)
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SAN FRANCISCO — Last year, All American Boy, a longtime clothing fixture in the Castro, closed its doors, and in December, Upper Market’s landmark home decor store Earthtones started its going-out-of-business sale. On the other side of town at Union Square, merchants have been shuttering at the peak of the recession.
Last year, San Francisco lost more than 9,899 businesses compared with 6,100 in 2008, according to San Francisco’s Office of the Treasurer and Tax Collector.
“Not surprising,” said Herb Cohn, president of the San Francisco Council of District Merchants. “Businesses are shutting down. It’s a problem and I think that we all have to do our best to shop local.”
BizBen.com, a company that tracks business sales statewide using data from county recorder’s offices, released statistics this month showing the number of small and midsize businesses sold in San Francisco dropped by 39 percent.
The number of new businesses that opened in The City dropped from 14,806 in 2008 to 13,872 last year, said David Augustine, policy and programs manager for the Treasurer and Tax Collector.
Before the economic meltdown, most startup businesses tapped into loans offered through the Small Business Administration, using their home equity for downpayments. However, the lack of SBA financing in the last few years has made it difficult for small businesses to thrive. On top of that, landlords have not been giving better rates on leases to business owners and when businesses are for sale, they are generally overpriced, said Peter Siegel, founder of BizBen.com.
“Access to capital has been a huge barrier,” said Regina Dick-Endrizzi, director of the San Francisco Office of Small Business. “It’s a tough economy.”
Scott Hauge, president of Small Business California, agrees that if investors can’t get financing, this could spell trouble for San Francisco’s already struggling business economy. There are more than 80,000 businesses in The City, employing the majority of workers in San Francisco.
But the lack of financing is only one obstacle. Businesses in San Francisco have been lamenting The City’s burdensome fees imposed on businesses. Some city leaders have been working to reverse that trend, starting with Supervisor David Chiu’s proposed legislation to cut 71 business fees.
“Closures are evident on every corner of the commercial districts,” said Linda Mjellem, executive director of Union Square Business Improvement District. “There will be survivors and then there will be those that don’t.”
Mayor urges business tax breaks
Mayor Gavin Newsom renewed his call for the Board of Supervisors to approve his package of business tax breaks that he says will retain and create new jobs.
“We must pass these measures now to continue the progress we’re making creating local jobs and reducing our local unemployment rate,” Newsom said Friday in a statement released a day after The Examiner reported the board would not hold a hearing on the three tax break measures.
The statement accompanied the announcement that the city’s unemployment rate has decreased from 9.9 percent — the reported rate in October — to 9.4 percent.
“Unfortunately, the Board of Supervisors is refusing to even calendar these three job creation and job retention measures,” Newsom said.
Supervisor John Avalos, who chairs the board’s Budget and Finance Committee and decides what legislation related to the budget is heard and when, said he has not decided to hold a hearing on the measures, despite a Friday briefing with the mayor’s staff.
— Joshua Sabatini
Shut down
Small businesses are opening less often in The City.
9,899: Businesses closed in 2009
6,100: Businesses closed in 2008
14,806: Businesses opened in 2008
13,872: Businesses opened in 2009
80,000: Businesses in The City
