By Councilman Allan Domb
When I started this year, my goal was to continue solving our city’s poverty crisis. Like everyone else, I wasn’t thinking about what was about to hit. However, every crisis presents challenges that call for immediate solutions that are managed responsibly and collaboratively. It is a moment for public and private sector leaders to join together and present solutions and opportunities that will allow everyone to weather the short-term impacts and chart a course for financial recovery.
The COVID-19 pandemic has presented Philadelphians with unprecedented issues, and the need for easing the financial burden for homeowners and small businesses couldn’t be any greater than in our city.
As unemployment surges in Philadelphia, there are more than 190,000 homeowners who are still responsible for making their regular mortgage payments, according to the latest Census figures. Furthermore, we know about half of our homeowners with mortgages already have unaffordable housing, paying more than 30 percent of their income toward housing costs.
Even with federal aid, many of our businesses are still struggling. Almost 28,000 businesses in Philadelphia have fewer than 100 employees, with many of these businesses in industries that have been deeply impacted by this pandemic. Unfortunately, restaurants, bars, hotels, arts and cultural and other entertainment sectors and retail shops in every neighborhood around the city may be unable to ever open again.
But, homeowners and businesses have options available to them beyond the more publicly discussed federal loan supports. It starts by immediately contacting their banks or lenders and discussing a loan forbearance – a pause on loan payments for an agreed-to amount of time while a business recovers. This helps keep their finances in good standing and prevents loan defaults or foreclosures.
Back in March, we started having conversations with area lenders and several of them were willing to offer these types of services to their customers. Through our efforts in Philadelphia alone, 15 financial institutions are providing forbearances and we know there are many others out there. We have been encouraged by all the lenders that have joined in this effort, and we know they play a vital role ensuring our economy is able to eventually move forward.
There are initial signs that these forbearance efforts are working. Philadelphia homeowners are receiving mortgage relief by moving their monthly payments over the next three to six months to the backend of their loan. Businesses are additionally entering agreements, allowing them to maintain their operations during this difficult time. When the economy turns around and these individuals can make their regular payments again, loan relief will be something they can point to that helped save their business.
Beyond the partnerships created with area lenders, we saw several partnering community leaders support this effort as well. Business membership organizations like the African American Chamber of Commerce have become experienced collaborators in this fight to recover. Donavan West, executive director of the African American Chamber, mentioned recently that he has witnessed countless testimonials from both its members and other business owners from the small business diaspora searching for mercy from the financial burdens they are faced with. A forbearance provides a much-needed reprieve from financial pressures that professionals and business owners alike are not in a position to address in their traditionally responsible capacity.
In the upcoming weeks, we will publicly debate our city’s budget and we have to keep in mind outside opportunities like loan forbearances because options like these provide huge impact with no cost to our local government budget. Now is the time to get creative in government.
As we look to move Philadelphia forward, we have an important responsibility to our people and it’s time to re-engage with our businesses, universities, foundations, community partners and thought leaders. We cannot tax our way out of this pandemic, but together we can uncover new solutions to help steer Philadelphia into the future in a more thoughtful, equitable and responsible manner. ••
Email Domb at [email protected].
