Small businesses embody much of the American spirit and culture. Only a nation that protects individual liberties and defines its foundational rights as “life, liberty and the pursuit of happiness” could allow average people to pursue the dream of entrepreneurship with a minimum of interference.
So when the coronavirus pandemic begins to threaten the health of those companies, that is a serious matter, indeed.
Congress and the president did the right thing by passing a massive stimulus package that, among other things, provides loans to small businesses that are entirely forgiven if they follow guidelines, including retaining employees. This is a helping hand with a minimum of governmental interference.
The important thing now is that the owners of these businesses know the help exists and can avail themselves of it.
A poll by the U.S. Chamber of Commerce and MetLife found that, by late March, 10% of small businesses said they were less than a month away from permanently closing their doors if they did not receive help. In addition, 24% said they were two months or less away from going out of business, and 43% said that date was three to six months away.
Nearly a quarter already have temporarily closed because of the pandemic, and 40% said they may have to do so within the next two weeks.
To put this in perspective, the U.S. Census Bureau says that, of the 28.7 million firms in operation five years ago, 99% were small businesses, with 88% of them employing less than 20 people. By that measure, the vast majority of the record number of people applying for unemployment benefits right now were working for one of these local concerns.
A cynic might say that if many small businesses go under during this tumultuous time, others will simply start up to replace them once the pandemic has ended. But the danger is that the damage could be so widespread that entrepreneurs will be skittish and banks reluctant to embark on new ventures, delaying recovery much longer than necessary.
As it is, small businesses are likely to alter the way they operate after the current crisis ends. That won’t be all bad. Owners may be more aware of the need to have cash on hand to cover short-term emergencies. They may be more likely to diversify supply chains so as not to become too reliant on single suppliers that might disappear during a downturn. Some of them may have discovered their employees can be trusted to work from home more frequently, reducing the need for expensive office space.
But they can’t put these lessons into practice if they no longer are in business.
The entrepreneurial spirit is a key part of America’s success, and it has remained strong from generation to generation. A study two years ago by The UPS Store found that 66% of Americans desire to begin a small business at some point. Members of the so-called millennial generation retain this desire, especially when it comes to starting businesses that provide a social value beyond merely making a living.
Banks and the government are still working out the details as to how the new Paycheck Protection Program, the small-business loans designed to keep local businesses going, will be administered. Governments, chambers of commerce and others must work hard to make sure every owner is aware that this help exists.
No one knows how long the pandemic-induced slowdown will continue. For the good of the nation, however, it cannot be allowed to permanently damage small businesses, the nation’s backbone.