As we navigate the COVID-19 pandemic and new lifestyle changes, it is important to recognize the impact of small businesses and their crucial contribution to the American economy. Defined as enterprises with fewer than 500 employees, the Small Business Administration (SBA) estimates that they generate close to 40-44% of all US economic activity. However, small businesses face significant challenges when faced with major disasters. This is because the sources of their dynamism in the marketplace can transform into their greatest sources of risk. These risks include:
- Reliance on niche markets prone to seasonal or economic fluctuations
- Small customer bases restricted by geography, market reach, or service specialization
- Fewer assets and minimal capital reserves
- Tighter supply chains and smaller inventories which rely on just-in-time, pull based logistics
- Lack of key social supports through benefits such as health insurance or sick leave
The COVID-19 Pandemic has placed pressure on all these weaknesses – disrupting operations while withering revenue streams. To survive, businesses need ready cash to cover operating costs while funding adaptation efforts. Additionally, around half of small businesses are not operating and that most hourly small business employees are working less than a quarter of their normal hours, resulting in wage losses of over $2 billion per day.
Fortunately, a wide variety governmental and private initiatives are under way to stimulate economic activity, reduce financial impacts on small businesses, and help affected workers. The CARES Act, recently passed by Congress, allocates nearly $350 billion to small business loans, creates a paycheck protection program, and contains special tax relief provisions. Most state governments are also implementing their own support efforts.
For more information on relief programs for small businesses, see the links below:
- US Chamber of Commerce: Coronavirus Small Business Guide
- Small Business Administration – Disaster Assistance in Response to Coronavirus
- Small Business Administration Disaster Loan Assistance for COVID-19 – Streamlined Process
- Small Business Development Council Coronavirus Information
- The Points Guy – Small Business Resource Guide (list of Federal, State, and Private relief programs)