By now, we are all too familiar with the artists’ illustrations of the virus that causes COVID-19. A sphere with spikes, scientists say this family of viruses resemble a sun, and so they call them “coronaviruses.” A more appropriate description of this round, spiky appearance may be a naval mine. Because right now, this country—in all of its regions and sectors—is at war.
One segment being crushed by COVID-19 is small businesses, places that line the nation’s Main Streets and strip malls. It’s these local stores that help define a community. For their owners, they are the dependent children into which they’ve sunk their savings and financial futures. Right now, those children are very ill. And each business’s failure could mean financial ruin for the owners, their families, and their employees, in addition to impacting the communities they call home.
To get a better idea of COVID-19’s effect on small businesses, Main Street America (MSA), an organization dedicated to revitalizing commercial districts, conducted an online survey of 5,850 small business owners from March 25 to April 6. Of these organizations, 91% have less than 20 employees. As in all things related to COVID-19, the numbers are staggering.
There was great fanfare when both houses of Congress and President Trump reached an agreement and signed off on the $2 trillion economic stimulus package. As part of the efforts to help smaller entities, the Small Business Administration (SBA) was put in the lead. But shortly after the stimulus’s rollout, the SBA was swamped with claims and had to adapt.
The hallmark of the act, and one that directly served small businesses, was the Paycheck Protection Program (PPP), a $350 billion fund enabling qualifying organizations to cover eight weeks of payroll expenses. As of April 19, the PPP had run out of money, and additional funding was locked in a political tug-of-war between Republicans and Democrats. A second wave of funding is likely to pass soon, however.
Before the onset of COVID-19, the national debt was already swelling. And the final bill for coronavirus relief will likely send that number to unprecedented levels that have serious consequences. That said, most economists seem to believe—as of right now—that the combination of the ability of financial markets to absorb this debt, consumer demand in a post-COVID-19 recession, and low interest rates place the US in a strong position to initiate relief efforts and get the economy back on track.
The more critical issues are long-term. COVID-19 debt will remain on government balance sheets for years and, possibly, decades to come—especially as the Baby Boomers continue to age, further changing the demographics of the country and stressing entitlements programs. Policy changes to deal with the debt could include raising the retirement age, increasing taxes, and heavy government spending cuts.
While the government continues to hash out the details of future stimulus packages, small business owners should be proactive and take steps now.
At the start of this post, we mentioned that it might be more appropriate to look at the illustration of the COVID-19 microbe as less of a sun and more of a naval mine–for good reason. The only way to consider the mind-boggling numbers—from infections to the number of unemployed to the stimulus dollars—is that this is a war. As in other wars, when national debts have historically skyrocketed, it will take time to recover.
At Morris Southeast Group, we are holding firm to the belief that we are all in this—and will get through it—together. And if history is any guide, the eventual aftermath of this shock event will see renewed success for our economy and small business owners.
We are here for you and the small businesses in our communities. We hope you join us in shopping these businesses if they are open during quarantine and as restrictions slowly ease.
If you have any commercial real estate concerns or questions, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com.