How Coronavirus is Threatening Small Businesses

How Coronavirus is Threatening Small Businesses

Coronavirus is now forcing workers and customers to stay home and officials to order quarantines, unfortunately this can prove difficult for American companies and devastating for small businesses.

For businesses like local restaurants and retailers that operate with tight profit margins and just enough people on staff, it will be difficult to provide sick pay. As well as slower business due to widespread illness and public caution. Areas where patients have tested positive for Covid-19 are already feeling the effects.

In Oregon, business has been down and takeout orders have been up for an Italian restaurant called Tucci. Only one mile away from the elementary school that closed when an employee tested positive for Covid-19 on Friday. This suggests that people are staying inside, said Gregg Matteucci, the owner.

“On any given night, if I have even just a couple chefs call out sick, we’re hurting,” he said. If multiple members of his 30-person staff were out, he said, “that would be really, really tough on us.”

He also stated “Not only would I have to pay the sick time, I would have to close my doors,”. Oregon law requires employers to provide up to 40 hours of sick leave. All places affected by the coronavirus have experienced stock market declines, supply chain backups and company cancellations of business travels and meetings.

Affected countries are starting measures to help small businesses. 70 percent of Beijing restaurants remain closed and China has pledged to help small and medium-size businesses by allowing them to defer certain payments and to provide lower rents and interest on loans. Italy has spent several billion dollars in aid, including tax cuts and credits for companies.

This week, the United States Congress will vote on a funding package for affected communities. Usually offered to companies experiencing natural disasters, the package would expand a small-business loan program.

Amanda Ballantyne, executive director of Main Street Alliance, a public policy group for small businesses has stated, “Small businesses are on the front line of this crisis… The impact on consumer demand can really impact the economy, so we think there’s an urgent need to get planning to local businesses.”

Currently there is no federal law requiring employers to provide paid, job-protected sick leave and only 59 percent of small business employees have it. Ten states, 20 cities and three counties require it, however it would still be difficult for small employers to be able to pay for days off for many workers at once, or to replace them.

Workers that do not have sick leave, or not enough of it, risk going to work and spreading the disease or staying home and losing their job. The Family and Medical Leave Act provides unpaid, job-protected leave, however only at companies with 50 or more employees.

For businesses affected by the outbreak democrats in congress have introduced a bill that provides interest-free loans of up to $2 million. While others have proposed expanding paid leave to protect workers and businesses. Senator Elizabeth Warren of Massachusetts released a response plan that would establish a federal fund to reimburse workers for lost wages if they missed work due to coronavirus.

The Healthy Families Act requires employers to pay employees sick leave. However that bill may not work for the coronavirus outbreak, due to workers earning sick time over the year and up to 56 hours.

The co-director of the left-leaning Center for Economic and Policy Research, Eileen Appelbaum, has stated “If someone gets the coronavirus, and they are out of work for two to three weeks or they are quarantined, that’s a place for the government to do something”.

The National Federation of Independent Business, is not calling for any changes to current policy. The group’s director of research, Holly Wade, said the organization opposes any mandated sick leave policies, and sees no need for targeted loans for small business, given current low costs of borrowing.

The Centers for Disease Control and Prevention has advised businesses to require sick employees to stay home; sick leave policies that don’t punish workers or require a doctor’s note; ask employees to let them know if their family members are sick. It also stated that businesses prepare for multiple employees to stay home, including them having to care for children if schools close, and emphasized the importance of hygiene for employees.

Unforunatly Asian-American-owned businesses are dealing with discrimination. Judy Chu, a Representative Democrat from Southern California, said businesses that are Asian-owned had reported a 50 percent drop in business, due to “dangerous misinformation and xenophobia.”

The founder of Nimble Made, Wesley Kang, an Asian-American business that makes men’s dress shirts said that the closure of their shipping partners in China and xenophobia are hurting his business.

In certain situations, small businesses are being affected even where there is no widespread outbreak or official notice to stay inside.

Patrick Day, owns two board game stores in King County, Wash., where the largest U.S. outbreak of the disease has happened. Patrick has said his business has very little room to absorb less customers or staffing shortages, the company’s profit margin is only 2 percent in a good year he said. His stores host board game tournaments every other day that can draw nearly 100 players, but due to the outbreak one store has seen sales drop by a third and the other by nearly half.

Mr. Day said, “If we have a few days out for snow, that can be pretty tough, but snow lasts, at worst, for a week… If we have to go longer than that, we’d need to figure out a way to get outside financing to stay afloat.”

Coronavirus is threatening small businesses and scaring consumers, different countries policy makers are now trying to counter this.

Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the best business funding lender in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.

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