Support for Small Business infrastructure to retool & last.
Many small businesses will need to significantly restructure their business model and infrastructure to survive through the duration of the crisis and find their way back to profitability. Yet, none of the existing relief programs specifically included support for small businesses to pivot to new business models and most limited the grant funding available for fixed costs. With most small businesses facing depressed sales and depleted savings, tailored support for retrofitting business spaces, and support for existing fixed costs such as rent and new costs like PPE is needed. Without this support, we will see a tidal wave of closures of businesses that could adapt and continue to be a vibrant part of our Main Streets. In place, we will see a wave of private equity buying up business and real estate - further concentrating our economy in the hands of a few.
Policies to support fixed costs.
Retrofitting/Retool/PPE - Rebuilding Main Street Act provides grants to cover up to 50% of the employer’s fixed costs and expenses necessary to reopen and reconfigure their businesses, with a cap of $300,000 per employer. Save American Main Streets act would provide immediate tax rebates to small businesses equal to 30% of the gross receipts reported in a previous year, up to $75,000. These are good starts -- but need to be built on and strengthened to be more universally available.
Rent Relief - As a stopgap measure, states, localities and the federal government passed tenant and commercial eviction moratoriums. Many of these are now coming to an end just as extended UI many end -- which may result in a tidal wave of evictions, disportotionaly impacting communities of color who are twice as likely to rent. With this lengthening crisis we need a comprehensive solution to link rent and mortgage subsidies and avoid mass evictions of families and small business tenants. Some states have taken the lead on such bills (NY, CA. DC) that need additional federal support. Further we need to explore options of initial public buy-out to ensure there is not a wholesale consolidation of private equity
Relaxed Fixed Cost Ratios - One of the strongest criticisms of the PPP program was the criteria that 75% of cost go to payroll for the loan to be fully forgivable. While this ratio has been dropped to 60% - this is still a high bar for many businesses in high rent areas and with sectors with high fixed costs. Programs need to build in more flexibility to address these variations.
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My margins are already low. My revenue has and will continue to be severely declining. And my costs are going to go up because I need to keep paying for the masks and the sanitizers and the new HVAC filters,” Tracy Singleton said, owner of Birchwood Cafe. “There are so many things, and there isn’t relief in place for those kinds of costs.”
— Read the Full story in Washington Business Journal: Small businesses note another flaw in SBA's PPP as reopening costs mount
