With the sudden emergence of the coronavirus pandemic, organized preparedness is vital. Recently, many organizations have developed risk management teams and special plans for responding to a pandemic. This is necessary, but it’s not enough. In an uncertain environment of a growing crisis, the most successful organizations will be those who can respond quickly to new conditions, but not without help from the outside.
Small businesses are the most important economic actors in the U.S. economy, so we need to help them survive. Although the Federal Reserve has pumped in liquidity, lowered rates to zero, and is working on QE (quantitative easing), these activities probably won’t have much impact on small businesses.
There have been a number of articles in the press that have discussed some useful ideas like buying takeout, gift certificates, or online delivery —but that’s still not enough. We need to do better than that. The coronavirus will have long-lasting effects — even worse than the Global Financial Crisis — so policymakers need to act quickly to address the needs of these businesses.
Fiscal policy is vital at this point. Consumers are the critical factor for the U.S. economy and also to small local businesses
What to do?
Help the consumer
The priority for everyone needs to be to ensure that consumers and small businesses get the help they need to get through this recession. First, the government needs to financially help people who can support small firms. People with low income will be the most vulnerable, so they need our help first.
Make sick leave possible
Second, we also have to think about providing not only zero-percent or low-cost loans, but possibly also offer grants to small firms, such as sick leave paid by the government. Physical health leads to economic health. We need to be sure that people who are sick can be financially stable. The Senate has to move on this bill as soon as possible. Otherwise, the economic recession will extend beyond this pandemic.
Third, we have to provide tax relief to small businesses. This can include measures like tax rebates or an extended tax holiday.
Fourth, banks need to be willing to lend going forward and to work with businesses to grant temporary relief and extend loan maturities. The Small Business Administration can play an essential role in subsidizing credit. However, encouraging bank lending can only be effective if consumers keep spending.
Finally, we all have to help these businesses. Shop and work locally. We probably won’t have any other choice anyway. We should focus on consumers and small firms to increase the probability of successfully surviving this crisis.
The vitality of local small firms is critical for the success of the U.S. economy. The consumer will be essential to the survival of small firms, and policymakers need to be aware of that and willing to act quickly.
If you need help maintaining and growing your small business, feel free to contact us!