The Effect of COVID-19 on Small Businesses
The effect of the coronavirus on small businesses and business owners was expected to be substantial from the beginning. Needless to say, for many businesses, the expectation has met reality. The impact of the pandemic depends on the type of business, with three categories being the most affected. Personal service, hospitality, and retail have taken the hardest hit from COVID-19 as they’re not viewed as “essential businesses” at the moment. The smaller the business is, the more they’re likely to be affected, and companies with fewer than 20 employees are hit the hardest. Businesses with less than 20 employees typically lack cash flow and revenue. Those companies were the first to be pushed into reducing hours or laying off employees. Before the coronavirus, these small companies accounted for about half of all U.S. private sector jobs. During the pandemic, they make up 54% of the jobs most susceptible to the effects of the coronavirus. Companies with less than 100 employees are considered extremely vulnerable, putting over 30 millions jobs at stake in these abnormal times. Small business owners are uncertain about what lies in the future for their livelihoods.
Local communities and Chamber of Commerces have worked to help prop up small businesses across the country. They’ve implemented advertising to shop local to their communities and communities seem to be responding. In Westfield, New Jersey, a website has been developed called “Virtual Westfield”. It shows residents of the area where and when they can shop and eat locally, and highlights those businesses that have implemented curbside pick-up, home deliveries, and gift cards/deals. The United States Chamber of Commerce has called upon President Trump and Congress to pass legislation to help smaller companies. If enacted, the payment of payroll taxes, typically paid by these businesses, would be removed for March through May. In addition, they would make loan programs - for small businesses struggling to bring in revenue - more efficient and extensive. State and local governments are doing their own part to help these companies by launching programs. The state of Washington is working on no-interest loans and deferments of bills for companies struggling with a loss in revenue.
Facebook has implemented its own grant program to help small businesses struggling due to the coronavirus pandemic. They’re giving $100 million to 30,000 eligible businesses located in the 30 countries Facebook operates within. They’ve also set up a Business Resource Hub to offer advice and information centered on how to deal with the struggles of the pandemic. Some corporations have stepped up to help and support small businesses, making resources available to aid them in managing expenses, financial support, supporting employees, and more as shown on McKinsey.com.
There’s still a long and uncertain ride ahead, and small business owners are doing what they can to stay afloat. With the reopening of the country, it seems likely that we’ll see an increase in cash flow throughout the economy. In the meantime, the most impactful way we can help these small businesses is by shopping local and, as individuals, supporting our local businesses in our own respective communities.
Article By Alyssa Crum
Picture provided by aarp.org