Small Businesses Could Be Facing COVID Crisis Crossroads

By Alan Wolf, YSN

As Congress still wrangles over the next stimulus package and COVID flares up in new parts of the country, economists, executives and independent owners are expressing their concern for the well-being of small businesses.

In an open letter to the majority and minority leaders of the House and Senate, Starbucks founder Howard Schultz and more than 100 high-power executives implored Congress to move quickly in drafting the next round of COVID-19 relief legislation.

“We cannot stress enough the urgent need to act,” wrote the business leaders, who include current and former CEOs of American Express, Cisco, McDonald’s, Merck, Microsoft, Salesforce, Walt Disney, Walmart, Zerox and the U.S. Chamber of Commerce. Small businesses employ nearly half of all private-sector workers and account for 44 percent of U.S. GDP, they argued. Yet by Labor Day, “We foresee a wave of permanent closures if the right steps”— including low-cost, federally guaranteed loans and partial loan forgiveness — “are not taken soon.”

Indeed, according to a survey of small business owners conducted July 20-21 by the National Federation of Independent Business (NFIB), 23 percent believe they will have to close their doors if current economic conditions don’t improve over the next six months, and another 22 percent don’t think they can continue for more than seven months to a year.

Jack Kleinhenz, Chief Economist for the National Retail Federation (NRF), the world’s largest retail trade association, agreed that “Optimism about the economy and retail spending is being tested daily with the spread of coronavirus.” Kleinhenz pointed to weekly data collected by the Federal Reserve Banks of Dallas and New York suggesting that the pace of the economic recovery is slowing amid a resurgence in COVID cases.

“Time will tell,” he said, “but the bottom line is that the economy is far from being out of the woods. The question is whether it is re-entering the woods.”

See: BrandSource, Members Suggest EIDL Loans as ‘Rainy Day’ Funds

BrandSource is a nationwide buying group for independent appliance, mattress, furniture and CE dealers and is a unit of YSN publisher AVB Inc.

Upcoming Events