How Do We Help Small Business During COVID-19 Crisis?
How Do We Help Small Business During COVID-19 Crisis?
The COVID-19 pandemic and accompanying economic crisis have forced this question into immediate consideration.
In many places, restaurants, bars, entertainment venues, and other types of businesses are being ordered to close or shift, where possible, to takeout and delivery only. Foot traffic is falling everywhere. Small, independent, local, and family-owned businesses are posting social media appeals to encourage people to keep supporting them. Some have already closed their doors, ahead of government orders.
At the moment, it seems possible that many small businesses may have to close their doors over the next several weeks. Closures could be temporary; in some cases, they might turn out to be permanent.
National economic discussions often focus on the cash-flow challenges faced by individuals and families. While the much-repeated statistic about American families being unable to cover a $400 emergency expense is not entirely true, it’s nonetheless true that many Americans don’t have a lot of liquidity, especially during a crisis. Hence the calls for stimulus similar to the 2008 financial meltdown.
But as I heard one national policy leader say today: the COVID-19 crisis is showing that many American small businesses have cash-flow issues too and effectively live the equivalent of “paycheck to paycheck.” Sharp declines in consumer demand can easily tip them into the red and, perhaps, failure. While a federal fiscal stimulus for Americans is not a bad idea, it won’t necessarily prompt everyone to go out and spend money at their local barber or hardware store. Social distancing will undermine demand-side stimulus.
Small business challenges will be exacerbated by squeezes on the supply side. With schools closing, more employees will face serious child care challenges. Many businesses may find it difficult to maintain staffing, even if they manage to remain open.
There is little question that big companies need help at this moment. Airlines, for example, are severely hurting and looking for a bailout. Hotels, cruise ships, national foodservice chains, manufacturers, and more may find themselves in line, too. Assistance should, and likely will, be given.
