OpEd: Businesses of all sizes must get through this together By Mustafa Rashed
The COVID-19 pandemic, which has shuttered most businesses, schools, and other public spaces worldwide, has had a profoundly negative impact on our global economy. Many state and local governments have set full or partial restrictions on public interaction. Around the world, entire countries like Italy and Spain have had citizens on lockdown for weeks, impacting the flow of goods and services throughout the global economy.
These are unique times for businesses of all sizes. Billion-dollar industries like airlines, hotels, gaming, professional sports, filmmaking, and others are experiencing unprecedented losses as revenues have mostly dried up. The restaurant industry has been exposed, as stay-at-home orders and social distancing have left them deciding whether to switch to takeout and delivery or close altogether, leaving servers out of work in a job that is heavily reliant on tips.
Many states have ordered all “non-essential” businesses to close their doors, which has the potential to hit small and minority-owned businesses especially hard with adversity not seen since the Great Recession. This includes many locally-owned restaurants, but also coffee shops, hair salons, nail salons, bookshops, and others who rely on regular traffic to pay bills and rent.
This economic crisis differs from recessions in the past because, with other economic downturns, many businesses remained open for those who had the funds to patronize them. With many of these businesses now partially or totally closed, profits are way down but bills will still come due and the funds might not be there.
Small businesses drive our daily economy. In 2018, 30.2 million small businesses employed 58.9 million individuals or 47.5% of the working population. Without small businesses providing crucial direct and indirect services to Americans every day, our economy would likely collapse.
Fortunately, government officials at every level have begun providing loans and grants for small and minority-owned businesses to apply for and receive funding relief.
The Philadelphia COVID-19 Small Business Relief Fund has raised more than $11 million in grants and funds for local businesses. While a deluge of applications forced the city to close applications on March 30 for the small business grant and small business zero-interest loan, the city is still offering microenterprise grants. Microenterprises are categorized as businesses with less than $500,000 in annual revenue, and they are eligible for $5,000 in funding per business.
The Paycheck Protection Program, administered by the Small Business Administration (SBA), provides stimulus loans up to $10 million, based on payroll costs. Almost all businesses with 500 or fewer employees are eligible to receive 250 percent of average monthly payroll expenses.
Additionally, the SBA is providing Economic Injury Disaster Loans (EIDL) to small businesses and nonprofit organizations. As part of the CARES Act signed into law last week, businesses can receive a $10,000 loan advance while waiting for loan approval, an advance that does not have to be repaid in the event that the EIDL application is denied. For businesses in disaster zones, which now includes all 50 states, the SBA is also providing $25,000 express loans. These loans are separate from any EIDL applications or a $10,000 advance.
While the government has provided myriad options for businesses struggling during this economic downturn, they are not the only channel for receiving financial relief, as several organizations have answered the call as well.
The William Penn Foundation, which focuses its efforts solely on Philadelphia, opened a fund for childcare providers April 6 providing assistance up to $20,000 from a $7 million fund. These grants are being distributed to cover revenue losses and cover current and future operating costs, based on providers retaining and continuing to compensate staff members.
Meanwhile, the Enterprise Center, which supports local small and minority-owned businesses, has opened multiple funding channels for business owners. Philadelphia-based small businesses that opened for business at least six months prior to the COVID-19 pandemic and have at least one employee can receive 1% interest loans, tiered based on revenue. Businesses earning $50,000 or less can receive $20,000, while businesses earning up to $250,000 can receive as much as $100,000 in loan funding. For minority-owned construction firms, the Enterprise Center is also offering loans up to $50,000 through a partnership with Brandywine Realty Trust.
These are unprecedented times for our nation, and everyone has had to adjust on the fly to meet the challenge. Small and minority-owned businesses are not always as equipped as large global corporations to handle sudden drastic changes to our economy. These businesses face extra hurdles to access capital and gain traction in the business landscape. Many small business owners make just enough profit to keep the lights on and the water running. A major economic downturn is a death sentence for many, but it doesn’t necessarily have to be.
As a small and minority business owner, I have experienced these challenges firsthand. I have seen and experienced these challenges with clients. One thing I know is this: we can get through this together, and come out stronger on the other side. We are all in this fight together.
Mustafa Rashed is CEO of Bellevue Strategies, a minority- and veteran-owned government relations and communication firm in Philadelphia.