By Tonya Garcia, MarketWatch
Governments in some major jurisdictions have ordered restaurants to close for all but delivery and takeout business, and have restricted other kinds of businesses, like movie theaters, from operating at full capacity.
And on Monday, President Donald Trump said a new recommendation calls for avoiding groups of larger than 10, with many people staying home in the interest of “social distancing.”
Major events are being canceled and postponed as well, eliminating another retail-sales driver. The St. Patrick’s Day parade was canceled in Boston, which Doug Bacon, president and founder of Red Paint Hospitality Group, said would have an impact on his business.
Bacon, who has been in business for 30 years, runs eight restaurants in the city, from a neighborhood pub that seats 50 to restaurant, bar and grill with a capacity for 400. He said events, college students — who have seen in-person classes eliminated — and other pockets of business have been taken away amid the combating of the pandemic.
“As an independent operator, I don’t have the resources that a publicly traded restaurant company with 2,000 locations would have,” he said. “I’m going to be drawing on my personal savings and resources if this business slowdown continues in order to keep my business functional and pay my employees.”
While he couldn’t be specific about timing, Bacon said layoffs, menu changes and even closing some of his businesses could be a possibility if this outbreak wears on.
The Small Business Administration offers guidance on its website , as well as a link to information about the organization’s Economic Injury Disaster Loan program. However, Frank Knapp, co-chair of Businesses for Responsible Tax Reform, said small-business owners will be reluctant to take on debt when their businesses are teetering on the edge of solvency.
“I’m not sure that small businesses want to take on extra debt to make payroll, even if the SBA now has $50 billion for loans,” he said. “This is for a loan that’s only to stay afloat versus growing the business, which is typically what a loan is for.”
He referenced Trump’s statement that $50 billion would be made available for small-business loans.
Instead, Knapp and others with whom MarketWatch spoke said that a cash injection is what’s needed.
“Businesses are operating under cash-flow challenges in the best of times,” said the Opportunity Fund’s Brown. “Now they need things that will free up cash.”
That includes delaying any required payments until a later time.
“We have to put more money in the hands of workers, both middle-class and low-income,” said Knapp. “We know if we do that, they’ll spend every penny. It’s always the No. 1 concern — consumer demand.”
This takes on added significance among workers employed at small businesses that can’t afford to continue to pay staff when there’s no business coming through the door. “A lot of small businesses don’t have policies for unemployment and other payments for leave, so the federal government can step in there,” said Knapp. “Small businesses can’t afford to pay people who aren’t working.”