Since the COVID-19 restrictions began, more than 60% of small business owners have reported decreased earnings as a result of the stay-at-home order. Around 52% of business owners believe that their business will fold within six months if this lockdown continues. With the COVID-19 pandemic resulting in the shutdown of cities both big and small, the impact falls on vulnerable communities – including community-driven small businesses that rely on foot traffic for most of their business.
In an attempt to help struggling businesses, the Trump Administration passed the CARES act – Coronavirus Aid, Relief, and Economic Security Act – back in April which aimed to provide financial assistance to workers, families and small businesses in America. The bill granted over $150 billion for municipalities which could be allocated to different sectors including: payroll, emergency recovery, eviction and foreclosure assistance, and loans to small businesses.
This bill contains protection for small businesses, labeled the Small Businesses Paycheck Protection Program. It aimed to provide small businesses with the monetary resources they would need in order to hire back employees and maintain business without financial stress. But many business owners feel that this bill was never created to properly support small businesses.
It has been more than three months since this bill was proposed, and we are beginning to see the effects that it has had on small businesses. According to NBC Bay Area, more than $200 billion of the small business loans in California went to large corporations including chain restaurants, software companies, and investment groups. For small businesses with limited employees, taking the time to fill out SBA paperwork while simultaneously trying to keep their business afloat during the pandemic can be extraordinarily difficult. Larger companies who have the ability to assign the paperwork to a specific team are able to receive funding at a faster rate.
According to an article published by The Atlantic, banks have been prioritizing applications that are sent in by bigger clients and wealthier companies. Even if this program had the potential to help small local businesses, the way the money has been allocated is not regulated. Studies have also found that areas and businesses hit the hardest by COVID-19 were not supported adequately enough. Within the food and accommodation service sector, two out of three jobs were lost yet they only received 9% of federal aid.
The bill helps protect small businesses from the immediate economic impact caused by COVID-19, but does not help to plan for what the future may bring. Approximately 32% of small business owners believe that the federal government is providing them with adequate support, and the remainder feel that they are not being supported or acknowledged.
The economic boost that small businesses provide, such as more jobs and innovative ideas, shows the importance of supporting these businesses. This is a crucial time for local and state governments to show their support for the small businesses and residents that reside in their community. There a numerous ways to support the small businesses in your community, but here are some to keep in mind moving towards our ‘new normal’:
The majority of financial assistance during this time should be going towards helping local small businesses; according to Forbes, the largest flaw within the CARES Act has been the allocation of funds and grants. The role of small businesses in the economy will create a strong community bond in any growing city. Small businesses are unique and have different stories to tell, which will help make any neighborhood and city thrive, and the prioritization of small businesses for local municipalities is crucial.