Small Business Economic Impact of Coronavirus

Small Business Economic Impact of Coronavirus

The small business economic impact of Coronavirus is starting to demonstrate its full potential impact now. As everyone has been scrambling to flatten the health curve of this virus, the economic curve has grown steep and long.  Having gone unattended now for over a month, this is where the pain will be found long after we have gained control of COVID-19.

The Wall Street Journal reported, “A Second Round of Coronavirus Layoffs Has Begun. Few are Safe.” With our unemployment rate already floating around 15%, our nation, nor our economy can withstand any further layoffs. However, they are almost eminent at this point. Best Buy just reported a furlough of 51,000 workers, and Governor Phil Murphy of New Jersey reiterated his disinterest in  addressing economic concerns until, “a full health care recovery” has taken place.

Economic forecasts have our recovery at 24 to 60 months already and there still appears no end in sight. This makes the small business economic impact of Coronavirus worse and worse. This is exponentially multiplied by the untimeliness and inability of the federal government to provide promised stimulus. The stimulus, in my opinion, is necessary, however whether you agree with the use of government funds in this manner or not, the problem is decisions were made with this pledge in mind. 

Still no Small Business Relief in Sight.

Many small businesses, expecting fast relief in both the form of the Economic Injury Disaster Relief Loan (EIDL) and the Payroll Protection Program (PPP) have now paid employees, offered the mandated two weeks of paid leave via the Families First Coronavirus Relief Act (FFCRA), and made other cash-flow reducing decisions in reliance of this stimulus when they would have otherwise simply laid off team members or furloughed employees. This situation is a lose-lose for many people. Employers likely should have saved their limited cash supply and employees likely were better off on unemployment as it appears likely they may end up there anyway based on current timelines and plans.

Experience applying for Economic Injury Disaster Relief

As discussed before, the Federal government’s approach to fiscal policy has been slapstick, incohesive, and patchworked at best.  The vast majority of small businesses across the country have yet to see any funds made available to them, and the rules keep changing. Take for example the EIDL, after submitting your application for the second time, an option was provided for an immediate $10,000 advance. For most, it has been over 3-4 weeks, no money has been deposited into the accounts provided to the SBA and now emails are being received stating the $10,000 advance will now be $1,000 per employee, if and when it ever comes.  This is an excellent example of the small business economic impact of Coronavirus.

Experience applying for Payroll Protection Program

This experience falls in conjunction with the PPP experience. You submit varying degrees of information, some potential lenders respond immediately with vague form letters, some not at all, and some promise a fast turn around that most never experience. Having submitted PPP applications Friday April 3rd, none of our four businesses have received any funding.  This too is complicated by hodge podge legislation and more concern about earmarked money for special interest groups well beyond any concern for small business.

Looking at the Economic Importance of Fighting the Coronavirus

Within the last few days some people have finally begun looking at the economic hurricane looming just off our shores as we continue to ignore the financial impact of this pandemic. Governor Phil Murphy, as referenced above, believes we need to mitigate the health risk prior to addressing the economic firestorm falling upon us. This is the completely wrong approach to this hornet’s nest. This only intensifies the small business economic impact of Coronavirus.

The Governor doesn’t seem to understand how the United States healthcare system works. While it’s not as prevalent as it used to be, most people’s healthcare is tied to their employment. No employment, no health care, no health care, less healthy society.  This is further impacted by the closure of fitness facilities, state parks, and the multitude of places people used to go to maintain their health. The severe economic downturn will have a far more severe impact on the health of our population than the Coronavirus has. 

Coronavirus Deaths versus Economic Deaths

It will likely look better on paper however, because we can divide up the deaths among multiple categories. This looks better politically. Can’t afford a newer car because you lost your job? No problem, that car accident death is a different segment. Die of cancer because you couldn’t afford to go to the doctor?  No problem, different category. Drug use increases because people are now working 2 jobs instead of 1 job and have less oversight of children, friends, and their behaviors? No problem, drug overdose deaths are a different category. These are some of the small business economic impacts of the Coronavirus.

We need to develop a plan that attacks both of the overarching problems of this pandemic at the same time. We need to develop tests and procedures to allow people to go back to work, while at the same time determining reasonable precautions to avoid a spike in the virus. The kicker is this however. These both need to happen fast. This needs to happen now. We cannot dwell on too many details or ‘what if’ scenarios.  Perfection is the death of progress. Lets focus on progress. Holistic progress that both saves Americans and saves America.

Leave a Reply