The number of active small business owners dropped by 3.3 million (22 percent) between February and April, the largest drop on record, according to NBER. Minority businesses were disproportionally affected. A study by the Federal Reserve Bank of New York found that 41 percent of Black-owned and 32 percent of Latino-owned businesses shut down between February and April, as compared to 17 percent of those with white owners.
Despite a partial rebound in the months since April, losses early in the pandemic will have long-term consequences. New COVID-19 cases are on the rise, and scientists are worried about the potential for cold weather and the flu season to intensify this trend. Updated public health guidelines, and self-imposed behavior changes, could keep customers away from local businesses during the holiday season.
Organizations in the nonprofit, private and education sectors are making efforts to help. In Seattle, the nonprofit Work for Humanity is offering business coaching. In the Bay Area, the Silicon Valley Community Foundation raised $3.5 million for micro loans to businesses, including a $350,000 donation from Comcast. The telecom conglomerate has made a much larger commitment through its RISE program for Black business owners. The National Association for the Advancement of Colored People (NAACP) has a grant program for Black-owned small businesses. The University of Tennessee is offering webinars to help employers in the state bounce back.
As these and many other projects move forward, state legislators are also proposing measures to support small businesses. Here are some of the ideas put forward in bills introduced in recent weeks.
SCR601, in South Dakota, calls for $400 million of unspent and unobligated coronavirus relief funds to be used to make grants up to $100,000 to qualifying businesses. Businesses whose gross revenue does not exceed $38.5 million, and that experienced a reduction in business of at least 25 percent, would be eligible for grants. The award amount would be based on a “cashflow from operations” model outlined in the legislation.
H6242, a Michigan bill, would provide loans to small businesses that were ordered to close by executive order to help them pay property taxes for the summer of 2020. The loans would have a two-year term and a zero percent interest rate. Businesses that earned less than five percent of their usual monthly revenue between April and July 2020 would be eligible.
Louisiana HB85 proposes to create a subaccount in the state’s Main Street Recovery Program to provide funding for a Bar Assistance Relief Program (BAR) to provide $2,000 grants to bars and breweries with no more than 50 employees that are not subsidiaries of, or owned by, larger businesses. Commercial fisherman who meet these and other requirements outlined in the bill are also eligible for grants.
S2983 in New Jersey creates a program to help suburban and rural small businesses with rent payments. To be eligible, they must occupy a leased space of less than 5,000 square feet. The bill appropriates $6 million for the program, with a limit of $10,000 per grant. The legislation would expand the reach of an existing rental assistance program to provide relief to businesses in municipalities not previously included in it.
New York A11084 offers help to small businesses that have suffered greatly as a result of the pandemic, providing funding for legal services in bankruptcy proceedings. Businesses forced into financial trouble by COVID-19 and public health restrictions would be eligible for temporary access to legal services, including consultation and ongoing legal representation. The state is directed to establish a dedicated fund for this purpose and to determine the level of funding required.
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