Not in the business plan

Dining at the Kitchenette cafe late last month required more than a good appetite: You also needed a valid photo ID and a police officer's assent.

Squeeze through the police checkpoint up the street, pass the nail salon and shoe store's shuttered metal gates, and you finally reach the place. A couple of blocks from the World Trade Center site, it's the only business that has reopened on this stretch of West Broadway.

Ann Nickinson and her business partner lost $110,000 in revenue and rotted produce during the Kitchenette's four-week closure. A week after reopening, she's determined to stay in business - but isn't so sure how long she can last.

"Small businesses cannot absorb that loss," says Ms. Nickinson as she tends to her only breakfast patrons: New York City police officers.

Nearly two months after the twin towers fell, most of the 7,000 small businesses in lower Manhattan, ranging from restaurants to shoeshine stands, are barely surviving.

With sales down as much as 80 percent and unpaid bills piling up, small-business owners say they're desperate for help from the federal government, which they say has been too slow in acting. After closing their stores for weeks, they returned to find inventories and business records destroyed.

Most customers either died in the attack or have since relocated away from ground zero. Regardless of whether they once worked in - or lived near - the World Trade Center, customers still can't get to the 2,700 small businesses in the "red zone." The area remains sealed off from the public.

Even on streets open to customers, many store owners say their vendors don't want to deal with the traffic hassles, and are reluctant to do business with firms that haven't paid rent or other bills in weeks.

And then there's the basic challenge of figuring out how to run a business without a phone.

"It's a pretend business right now," says Steve Stoppard, manager at the Tribeca Hardware store, whose customers traditionally have been apartment-dwellers looking for house paint or home-improvement tools. Now, he says, they only ask for face masks and air purifiers.

Plenty of pedestrians pass Parry Patel's newstand at the corner of Broadway and Fulton Street. But they're tourists, gawking at the World Trade Center site, rather than the business people who used to buy his newspapers and magazines. "I'm hardly surviving," says Mr. Patel.

Yuriy Davidov, who operates a shoeshine store in the Fulton Street subway station, owes $2,000 in back rent but takes in only $30 a day. His wife lost her job on Sept. 11, when her employer was killed.

The ripples reach far beyond the tip of Manhattan. New Jersey's Commerce and Economic Growth Commission has fielded hundreds of calls from small businesses, including travel agents and limousine services who lost their customers, says spokesperson Karen Wolfe.

Inside the sealed "red zone," business, of course, is far worse. Customers still can't reach Al's Pizzaria, located around the corner from ground zero's edge. Since his regular phone line is out of order, manager Richard Cuffaro provides customers with a cellphone number to call during the one day a week that police allow deliveries.

And even though the air is thick with ash, Tom and Tracey Park sit in their dry-cleaning store a block north of the Trade Center site. They don't wear masks, fearful of scaring away any potential customers.

"We have no [steady] income," Mrs. Park says. They've survived within the red zone only because residents in the building above them need someone to clean their soot-covered clothes. Already, they have had to close a second location three blocks south of the World Trade Center. They filed a 12-page loan application with the federal Small Business Administration (SBA), but wonder how they'll ever pay it back.

"We need grant money," says Mrs. Park. "The government is only thinking about the people who died."

While business owners want cash grants, the federal Small Business Administration (SBA) only provides low-interest loans to help restart businesses.

After past disasters, including Hurricane Floyd, which flooded parts of New Jersey, business victims also demanded cash relief, says Fred Hochberg, who served as deputy and acting director of the SBA under President Clinton. They only received loans.

But business owners and city officials say the disaster they face now is far worse than a hurricane or an earthquake.

"If a company has been out of business several weeks and has used up its cash reserves and has no income right now, it's difficult to take the leap of faith and borrow money," says Michael Carey, president of the New York City Economic Development Corporation.

At the federally run Downtown Emergency Assistance Center, small-business owners mingle among folding tables staffed by volunteer lawyers, accountants, and emergency-relief officers.

Most business owners, however, leave disappointed, says one loan officer stationed here.

"Everyone thinks they're going to get all this free money. They come in expecting us to write checks," he says. "It's not that easy."

Instead, SBA loan officers provide information about physical-disaster loans that help repair or replace damaged workspaces, and economic-injury loans that give companies a financial boost through the first few weeks.

As of Nov. 1, the SBA had received 2,904 applications in the New York area and approved 874 loans totalling $82.1 million, according to Herbert Mitchell, associate SBA administrator for Disaster Assistance in Washington.

That's a smaller response than the SBA historically receives following a disaster, says Mr. Hochberg. Many businesses just can't assess their losses, since so many customers have disappeared.

Business owners also complain that SBA loans require them to put up collateral when the economic damage is more than $10,000. And SBA loans take days or weeks to get processed.

Until SBA loans are approved and insurance proceeds arrive, small-business owners are relying on cash borrowed from friends, low-interest bridge loans from private banks, and the goodwill of vendors.

So far, cash grants are slow in coming. Three hundred businesses called Manhattan Borough President C. Virginia Fields after she announced $30,000 in grants to small-business owners. The money has already been spread among 28 owners.

Two weeks ago, an association of area businesses, the Alliance for Downtown New York, announced it will distribute $6 million in aid to small businesses. The money will fund grants, loans, technical assistance, and wage subsidies designed to keep small businesses in the neighborhood, says Sharon Greenberger, the alliance's vice president.

The city government's Economic Development Corporation hopes to soon match the Downtown Alliance's grants funded by private foundations and nonprofits. Even so, Ms. Greenberger says nonprofits, foundations, and the city government can't meet the need alone.

Equally important, Greenberger says, is making sure that small-business owners' customers stay in the area. So, the Downtown Alliance joined city officials and US Sen. Charles Schumer to push for incentives to keep commercial tenants anchored around the financial district.

"We need much more money, but it's a place to start," Greenberger says.

The World Trade Center attacks provided an unfortunate but valuable lesson in why even small businesses need to plan for disasters in advance.

While all companies were caught off guard by the tragedy, small businesses, which generally lack the money or staff to plan for such a catastrophic event, were particularly hard hit.

Nonetheless, small-business owners can create emergency plans and adopt simple measures, ranging from keeping duplicate records off site to buying business interruption insurance, the Small Business Administration advises.

"Just as a business prepares a business plan and a marketing plan, it ought to have a disaster-preparedness plan," says Herbert Mitchell, associate SBA administrator for disaster assistance.

That means first identifying what items the business simply can't operate without - including key equipment, parts, and suppliers.

A list of employees and suppliers' phone numbers - along with copies of essential business records - should be kept off site, Mr. Mitchell suggests.

Companies should also determine whether their insurance would provide enough money to restart after a disaster. Business owners should review the adequacy of coverage each year.

In New York, many companies discovered after Sept. 11 that they lacked the right kinds of insurance or hadn't purchased enough insurance to cover their actual losses.

"You think, 'I have insurance for theft, what more could happen?' " says Sharon Greenberger, of the Alliance for Downtown New York.

Riders may be needed to cover such unusual events as earthquakes, tornadoes, or floods. Don't assume that just because an area has never been affected by such natural disasters, it won't happen in the future, the SBA warns.

In addition, companies should maintain business-interruption insurance that kicks in when operations are shut down or suspended. That can help cover payroll, vendor, and inventory expenses needed to restart operations.