Slowly but surely, things are looking up for small businesses in California and New York, two of the states hardest hit by COVID-19.

In the wake of both regions dropping most of their COVID-19 restrictions, business leaders and entrepreneurs are starting to see light at the end of a very dark tunnel that’s lasted for more than a year — even as they grapple with staffing shortages, higher prices and new variants of the virus.

Both the Golden and Empire states have seen over 70% of adults receive at least one dose of the COVID-19 vaccine, leading governors there to relax most social distancing and masking requirements. However, the rise of the Delta variant is playing in the background, and threatening to erode hard-fought gains, while struggling restaurants still need a financial lifeline.

“We are starting to turn the corner,” Rodney Fong, president of San Francisco Chamber of Commerce, told Yahoo Finance in an interview.

For Bay Area residents, that means pretty much everything will slowly go back to normal, especially for the vaccinated. There aren’t any required capacity limits, no more physical distancing requirements, regardless of setting.

“We’re certainly on a daily basis starting to see activity, almost hourly activity. Conventions are being booked. Larger group events are starting to come together. Meetings are coming together,” Fong said.

“Office is starting to come back literally by the hour, by the day, it's changing,” he added.

Ahead of the July 4 holiday, New York is springing back to life after Governor Andrew Cuomo recently lifted most of the state’s coronavirus restrictions. Just weeks ago, the Empire State hit the 70% threshold of adults receiving at least one dose of the vaccine.

“We’re opening up very well,” Mark Jaffe, President of the Greater New York Chamber of Commerce, told Yahoo Finance recently.

For the Big Apple, it means an end to social distancing or gathering limits for more than a dozen commercial and social settings. While masking is still required on public transportation the requirement has been relaxed for indoor settings. The state is also still employing limited contact tracing as the Delta variant rears its head.

“I know our COVID numbers are leading the nation so we have a lot to be optimistic about but the recovery is still underfoot,” Jaffe added.

Boom in new business applications

Businesses in both states, however, will still have the option of requiring health precautions on their premises. Meanwhile, the boost in foot traffic isn’t enough just yet for small businesses that need continued support.

According to data compiled by the San Francisco Chamber of Commerce, 48% of the city’s small businesses are open, better than the 41% figure in New York.

Still, recent data suggests there’s been a boom in new business applications, with the CEO of Paychex telling Yahoo Finance Live on Wednesday that the company has seen an explosion in accounts.

“Small businesses were having a difficult time, retail in particular,” Fong added. “I think that has a lot to do with the cost of commercial rent, cost of construction.”

In California, Governor Gavin Newsom’s Comeback Plan proposes an additional $1.5 billion for small businesses, bringing the total to $4 billion in grants. That can help boost what Fong referred to as a “small business renaissance.”

New York has a similar program, offering state funds of up to $50,000 to small businesses as part of its pandemic recovery program.

“We’re operating at less than 60% of pre-pandemic levels right now,” NY Chamber of Commerce’s Jaffe told Yahoo Finance. “It’s pretty similar throughout the country but New York will come back strong.”

There’s a strong awareness for all the businesses that made it through the pandemic, but many did not survive. But some say there’s a competitive advantage opening up at this particular time.

In San Francisco, “the rents are suppressed, commercial rents are suppressed, it's an opportunity to start something that maybe you’ve always dumped out,” said Fong.

While Newsom initially set June 15 as the target date to lift restrictions on capacity and distancing regulations for nearly all businesses and activities, he has vowed not to end the statewide declaration of emergency.

And California will stop giving unemployment benefits to people who are not actively applying for jobs as the economy rebounds. Still, local businesses are hoping consumer confidence will come back.

“They need customers, they need that consumer confidence and people just to get out of the bed, spend some money, books, something that they’ve been holding off on to that project,” Fong said.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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