On January 10, 2002, Congress appropriated an additional $2 billion for CDBG funding, earmarking at least $500 million to compensate small businesses, nonprofit organizations, and individuals for their economic losses. HUD is one of many federal agencies that offer disaster assistance, and HUD requires that its funds not be used to duplicate benefits provided by other federal agencies, such as SBA. These types of assistance are not discussed in this report. Businesses with fewer than 10 employees accounted for about 75 percent of the businesses assisted (see fig. 3). SBA, New York City and State, Banks, and Nonprofit Organizations Have Also Assisted Small Businesses

Empire State and LMDC are not alone in their efforts to provide assistance to small businesses in lower Manhattan. Congress made special appropriations of $175 million to SBA for disaster assistance to respond to the terrorist attacks. The state established the World Trade Center Retail Recovery Grant Program to provide cash grants to retail businesses. In addition to the grant programs, within days of the September 11 attacks, both the city and state established emergency walk-in centers that assisted small businesses. Appendix I: Scope and Methodology

To obtain information on the assistance provided to small businesses from Community Development Block Grant (CDBG) supplemental funding, we interviewed officials from the Department of Housing and Urban Development (HUD), New York State’s Empire State Development Corporation (Empire State), and the Lower Manhattan Development Corporation (LMDC). To obtain information on other sources of funds available to rebuild and sustain business in lower Manhattan, we interviewed officials from the following: the Small Business Administration (SBA), the New York City Economic Development Corporation, the New York Small Business Development Center (SBDC), FleetBoston and the Bank of New York, and nonprofit organizations that provided financial assistance.
Why GAO Did This Study

The attacks on the World Trade Center had a substantially negative impact on the New York City economy, severely affecting businesses. In the aftermath of the attacks, Congress, among other things, appropriated emergency supplemental funds to several federal agencies to aid and rebuild the affected areas. The Chairman of the House Committee on Small Business asked GAO to describe the assistance provided to small businesses that is funded from emergency supplemental appropriations of federal Community Development Block Grant funds and other sources.

What GAO Found

To assist in New York City's recovery from the September 11, 2001, terrorist attacks, Congress appropriated $3.5 billion in Community Development Block Grant funding of which Congress earmarked at least $500 million to be used to compensate small businesses, nonprofit organizations, and individuals for their economic losses. One year after the attacks, these funds, administered in part by New York State's Empire State Development Corporation (Empire State), have provided $266 million to about 9,000 small businesses, many with fewer than 10 employees. Such assistance has included grants to compensate businesses for part of their economic losses--for both physical and economic injuries--and payments to attract and retain small businesses in efforts to revitalize the affected areas. Hundreds of millions of dollars remain available through these and other programs to assist an estimated 18,000 affected businesses. Empire State has employed mailings, visits, walk-in centers, and mass media to inform businesses of assistance programs. Other efforts by the Small Business Administration, New York City and State, banks, and nonprofit organizations have provided critical assistance to address the immediate and additional unmet needs of small businesses.