- April 4, 2020
- Posted by: Kirsten Campbell
- Category: Blog
“I’m from the government and I’m here to help” has taken on a whole new meaning
Money upfront and fast
During the Great Recession, small businesses in 16 metro areas accounted for over 90% of total job losses. They were hit the hardest in 2008. This is why small businesses typically need the most government support to remain buoyant because they’ve always shouldered a heavier burden, even today. The faster they have access to funds, the quicker they can stop the bleeding.
Seriously. Just last week there was an astonishing 3 million people suddenly unemployed. Now, a record 10 million Americans have applied for unemployment insurance in an extremely short period because of the government’s response to the coronavirus. This is much worse than during the 2008 recession and in fact, as of today, unemployment numbers are projected to reach as much as 30% behind this pandemic.
Small businesses are already getting hammered, they need access to money that’s not hidden behind red tape and bureaucracy. It’s clear that the pandemic is wreaking more havoc on small businesses than the brunt of the 2008 recession – at least restaurants and shops could expect daily foot traffic and customers, back then. Now? Not so much. Fast access to capital is imperative for small businesses to stay afloat in the short term and soften the long term landing.
Main Street > Wall Street
One major take home lesson we learned from the Great Recession of 2008, is that bailing out the stock market at the expense of small businesses was a mistake. We know that young businesses in the zero to five year range drive America’s productivity growth and job creation and they, along with micro businesses, are the most vulnerable. Given their more precarious position compared to older, more established firms, both young and small businesses have already begun to hemorrhage employees. Kicking off a mass unemployment and reducing the demand for goods will have a profound ripple effect on the entire global economy. Policies are necessary to ensure Main Street is taken care of, because they represent the lion’s share of employers in the US, which means they’ll ultimately be the ones tasked with dragging the economy back from the corona induced recession.
Bitch better have my money
The $2 Trillion bailout from Congress has addressed several painful points for small businesses, but overall, it has fallen short of delivering speed and simplicity for entrepreneurs. A chance to deliver tools of empowerment for sustaining the rocky road ahead was squandered. Direct assistance is necessary to salvage the businesses and incomes of everyday people who comprise the 99%.
Luckily, the Coronavirus Aid, Relief, and Economic Security Act (CARES) was passed by Congress to provide pivotal assistance to the US economy. Under the Act, industries that were hit the hardest, [think travel, restaurants and healthcare], now have access to much needed funding to try and keep as many employees on the payroll as possible. In certain instances, this funding, provided as SBA Loans, will be forgiven if the business continues to employ all of its workforce. For those that have been let go from businesses for no fault of their own, this Act also increases the amount and duration of unemployment benefits, which should greatly assist those through these difficult times.
Now granted, while most of these ‘fiscal stimulus relief packages’ are hardly ideal for everyday people or small and younger businesses, it’s what we’ve got. So use it. It is the only glimmer of hope that we have so far, pointing to some semblance of potential stabilization for us.