NEW YORK – When will the money arrive?
That's the urgent question for small-business owners who have been devastated by the coronavirus outbreak. They're awaiting help from the $2 trillion rescue package signed into law Friday. But with bills fast coming due, no end to business closings and an economy that's all but shut down, owners are worried.
Millions of owners face due dates Wednesday for rent, mortgage, credit card and other payments. There are also other business and personal bills that are owed. And employees – at least those who haven't been laid off – must be paid.
“How quick can we get these funds?” says Adam Rammel, co-owner of Brewfontaine, a bar and restaurant in Bellefontaine, Ohio, that's now limited to takeout and delivery service. His revenue is down 60%. Yet he has eight staffers, down from his usual 25, whom he must pay.
“Relief can't come soon enough – we're a cash business with small margins,” says Rammel, who is looking to Small Business Administration loans.
Freelancers and people whose gig work has vanished are also anxious.
“I need to pay my electric bill and the mortgage,” says Krista Kowalcyzk, whose Southwest Florida photography business has come to a halt as weddings have been canceled and customers have decided against having portraits shot.
She feels somewhat reassured that she can receive unemployment benefits. But while she waits, “I am terrified that not only do I have no revenue coming in, I have also been asked for thousands of dollars in refunds.”
At companies small and large, from restaurants and retailers to sports and entertainment venues, revenue has essentially dried up. The same for the businesses that support those companies. Even employers that are still operating have lost business as their customers have became too cautious to continue doing business.
The rescue package provides for Small Business Administration loans to companies as well as to sole proprietors and freelancers. The loans can be used for payroll, mortgages, rent and utilities, with those amounts forgiven and payments deferred. It will also supply small loans that can, depending on an owner's credit score, be approved quickly. Employers can receive tax credits for retaining workers, though not if they have obtained one of the SBA loans.
Many owners are also seeking separate SBA economic injury disaster loans. And the Federal Reserve plans to set up a program to lend directly to small-business owners.
In addition, freelancers are now eligible for unemployment benefits, something they hadn't previously qualified for. And owners can be eligible for the $1,200 per person payment that's available to many Americans.
Whatever the source of funding, how fast it arrives at businesses across the country is sure to have a significant impact on the economy. Slightly more than half of American workers are employed at businesses with 500 or fewer employees. Every lost job means another person will struggle to pay rent or other bills. Unpaid bills, in turn, cut revenue for other businesses.
Macy's to stop paying workers
Macy's says it will temporarily stop paying tens of thousands of employees who were thrown out of work when the chain closed its stores in response to collapsing sales during the COVID-19 pandemic.
The majority of its 125,000 employees, including stock people and sales clerks, will still collect health benefits, but the company said that it is transitioning to an “absolute minimum workforce” needed to maintain basic operations. Macy's has lost the bulk of its sales due to the temporarily closing of all 500 of its stores starting March 18.
The move is perhaps the most dramatic sign that even big-name retailers are seeing their business evaporate and that the $2 trillion rescue package passed by Congress and signed by President Donald Trump last week may have come too late for some.
Nordstrom said last week it was furloughing a portion of its corporate staff. And shoe company Designer Brands Inc., which operates DSW Designer Shoe Warehouse, furloughed 80% of its workers, effective this past weekend.