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The COVID-19 Global Pandemic has ravaged developed economies across the planet. In the United States its spread has hampered supply lines, manufacturing bases, and perhaps most of all, decimated small business. The high transmissibility of the virus has resulted in months long lockdowns in many major hubs of economic activity and brought many service-based sectors to a virtual stand-still. Many industries have been affected, but Main St. has been hit the hardest, and it is believed that if the course doesn’t change soon, massive numbers of small businesses will be shuttered in the wake of COVID-19.
According to SmallBizTrends.Com, a small business survey conducted by Lending Tree reveals that up to 40 percent of small businesses in the nation’s top 50 metropolitan areas face closure if business does not soon return to normal. The results of this survey were published in July in the run up to the expiration of the Nation’s PPP economic stimulus program, on August 8th. As the nation gets deeper into the fall, no new stimulus agreement reached, the findings of the study are increasingly more alarming. Why did so many small businesses in July believe they were at the brink of ruin? They didn’t have cash on hand.
The cash crisis facing small business is spread across the country. According to the study, Hartford, CT is the hardest hit metropolitan area in the country where 40 percent of small businesses say they had less than one month’s reserve cash on hand. Small Biz Trends point out that there is also a significant number of businesses with far less than one month in cash reserves: “A little more than 9% say their cash reserves would only last one to seven business days.” Hartford is not an anomaly. The study cites that businesses in St. Louis, MO “38% of small businesses say they have less than one month’s worth of cash. Almost 11% say they have one week’s worth of cash available or less.” In contrast, the major metropolitan areas of Detroit, Austin, and Portland had the “most cash on hand,” where 24 percent of businesses had a month or less available to them.
When the metropolitan areas in the best shape in the United States still risk losing up to 24% of their small businesses, the situation is dire. The virus is not just going to go away but the livelihoods of countless Americans may be destroyed in the coming months if they have not been already. Congress has done a disservice to the small businesses of this country by politicizing any further aid to Americans to the point of doing nothing. American businesses need money in the form of government assistance or a transition out of COVID-19 lockdowns. And they needed it yesterday.
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Image Credit: Photo by Ashim D. Silva on Unsplash