U.S. Small businesses face mass closures
OAKLAND, Calif./NEW YORK (Reuters) - After surviving two strokes at age 27, Olivia Colt threw herself into starting a catering business, a lifelong dream. Ten years and another stroke later, she had built Salt & Honey Catering Plus Events into a thriving operation in downtown Oakland.
Now with the coronavirus pandemic forcing cancellations of her customers’ weddings and events, she has slashed her staff from 25 to six and tried to drum up new business by selling groceries online. She secured a $100,000 forgivable loan under the U.S. Paycheck Protection Program (PPP) and another $150,000 loan under a federal program usually used for natural disasters. She expected the money to get her through just a few months of hardship.
But the hardships are dragging on.
“I’ve applied for all the grants and loans, I have maxed out my credit card, used my company’s reserves, spent my savings,” she said.
Colt now fears she may have to shutter her business permanently. Many small businesses nationwide are reaching similar breaking points in an economy with the highest unemployment rate since the Great Depression. Small firms have survived the pandemic so far with a mix of government aid, forbearance on debt and rent and creativity in selling to an increasingly homebound and financially distressed populace.
As the first wave of U.S. aid runs short - and landlords and lenders lose patience - lawmakers are in tense negotiations over a new round of stimulus, which could include more money for small business.
Most firms have already run out of the money they secured from the $600 billion Paycheck Protection Program, according to a survey released this week from the National Federation of Independent Business, a leading trade group for small U.S. firms.
The federation also found in early July that 23% of respondents expected to be out of business within six months unless economic conditions change..