Supporting Small Businesses Creates Great Economic Impact

Even before the onset of Coronavirus, brick-and-mortar stores, especially smaller boutiques, already struggle competing with online stores. The situation became even worse with the halt in economic activities, forcing businesses to shut down temporarily. Moreover, allowing them to reopen only with strict protocols increases their costs while limiting their income-generating ability.

Considering this fact, it is no doubt that many small businesses will permanently shut down. Like everyone else, policymakers are sad with the outcome. With small companies contributing about half of the private sector GDP and employment, being much affected in this crisis resulted in a 33% plunge in economic output. 

“If operations become more expensive and income goes down, businesses’ profit will go down too. For many businesses that were already operating on razor-thin margins, operating simply won’t be sustainable.”

Carrie Lukas, vice president for policy and economics at Independent Women’s Voice

There is still hope for small businesses. Many managed to thrive and blossom before the pandemic. Now, instead of displaying their products in the marketplace, a growing number of entrepreneurs venture to e-commerce, taking advantage of social media and other online platforms to be a direct seller. 

E-commerce may be beneficial even before the pandemic, but entrepreneurs enjoy these benefits exponentially now more than ever. Managing an online store doesn’t require a start-up cost, and doesn’t accumulate rent, salaries, utilities, and supplies expenses. Also, they have a far-reaching network to potential customers. 

With the CARES Act, a $150 billion financial support to states, small businesses had lifelines to cling on at this time of crisis. Paycheck Protection Program (PPP) from the federal government gives direct incentives for small businesses to maintain employees in their payroll. 

Contrary to this stimulus efforts, policymakers threaten small businesses with its “disastrous anti-dependent contracting law” or California’s Assembly Bill 5. This law wreaks pervasive distress to companies by raising their costs, threatening employment security, and killing flexible work arrangements. The Democrats plan to regulate this nationally through PRO Act.

Moreover, policymakers impose Glass-Steagall Act that could “crackdown on online selling by forcing major selling platforms to choose between selling their own products or offering that opportunity for others,” as explained in a news report. Hence, small businesses cannot entirely rely on the federal government to thrive during this economic crisis. 

Corporate benefactors and philanthropic organizations pump money out of their limited budgets to extend help. Local governments, such as Charlotte, developed workforce training programs to ensure advanced technology and renewable energy. In Detroit, the Feed the Frontlines program organized by the local government and its partners paid $400,000 to restaurants to make essential workers’ meals.

More businesses benefited from these efforts.

“Feed the Frontlines really helped with the morale of my business because I was able to bring my team members back on.”

Nya Marshall, entrepreneur and restaurant owner

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