Crowdfunding sites are a lifesaver to NY businesses affected by Hurricane Sandy. Victor Chen’s Peck Slip sushi spot, SUteiShi, was six feet underwater after the storm. Although he applied for Small Business Administration loans, he hasn’t received anything. According to Crain’s New York Business, after launching SUteiShi Rebuild on Indiegogo, Chen sold more than $20,430 worth of future meals.
Indiegogo founder Slava Rubin said his site raised more than $2 million in five weeks for Sandy-related campaigns. Crowdfunding sites Smallknot and Lucky Ant have raised thousands for Red Hook and Lower Manhattan businesses. Jay Lee, CEO of the East Village-based Smallknot, said a typical view is it’s risky to lend money after businesses have been through a disaster. He told Crain’s, “For us, we think about the engagement of community and customers who want these places in the neighborhood, and a disaster heightens that. The important thing is that there are other ways to finance than filling out an application for a bank loan.”
But there are drawbacks. Fees levied by crowdfunding sites can be much higher than those demanded by credit carts. Businesses providing future services still have to carefully monitor their cash flow and tax payments. And they might find that interest in their cause is fleeting. Rubin told Crain’s “The downside to the speed is how quickly public attention changes. But there are a lot of people and businesses that could still use the support.”