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Business closure picture incomplete for Gainesville

16 percent have not yet renewed licenses

POSTED: April 18, 2009 12:14 a.m.
TOM REED/The Times

Numerous restaurants closings have caused an apparent drop in business license renewals in Gainesville, though the final tally won't be known for several weeks.

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Debbie Jones’ city marshals are the unofficial talliers of failed businesses in Gainesville.

Every time they see an empty storefront where a store or restaurant once operated, they make a note of it so that the business is removed from the list of Gainesville’s 2,300-plus business license holders.

"There are some," Jones said.

As of Wednesday, Gainesville’s deadline for renewing business licenses, some 380 of the city’s 2,322 active business license holders had not paid their renewal fee. That number, if it stood, would mean 16 percent of businesses that were open in the city limits last year have closed.

But officials say it’s too early yet to rely on that number as an indicator of Gainesville’s small business health.

Over the next few months, city finance officials will go down the list, calling delinquent business owners and sending marshals out to some addresses before they write them off and take their accounts off the books.

Senior Financial Technician Tracie Morris said she knows that several businesses on the list of delinquent license-holders remain open. And compared to years past, more businesses are renewing on time this year, she said.

"It will be the end of June before everyone is accounted for," Morris said.

If Gainesville did have a double-digit percentage of small business closures in this recession-battered economy, it wouldn’t surprise Robert Coleman.

Coleman, an expert on small businesses and publisher of the financial newsletter The Coleman Report, said that small business failure rates increased 154 percent from 2007 to 2008. Of all the businesses that have received Small Business Administration loans since 2001, nearly 12 percent have defaulted. The default rate "spiked tremendously" in the past two years, Coleman said.

High default rates mean fewer lenders willing to take risks.

"That is one of the reasons you have credit constriction at the bank level for small businesses and restricting capital for Main Street," Coleman said. "Small business performance, unfortunately, is indicative of the entire economic climate."

And while factory closures and mass layoffs make the headlines, the quiet deaths of small businesses have just as much, if not more, impact on jobless rates.

Half of the country’s gross domestic product is driven by small businesses, Coleman said, and "80 percent of new employment is created by small business."

"All new employment is coming from small business right now," he said. "The buzz is that small business will be the leader in taking us out of the recession."

Conversely, the five or 10 people who lose their jobs in every small business closure add up. Some worked at shuttered businesses that were town fixtures for decades.

"It’s tragic what’s happening in our local communities from that standpoint," he said. "The problem we have is while there will be a recovery, and the banks will survive and Detroit will survive, those people aren’t coming back to Main Street. That’s the real tragedy for our communities."



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