The global coronavirus pandemic has forced businesses around the world to shut down, or at least operate at a limited capacity. While the idea behind self-quarantine is to allow the medical community time to develop treatments and boost their supply, the prolonged pause in economic activity is raising a host of new concerns.
In California, every non-essential business is shut down. In other states, restaurants, entertainment venues, and gyms are either shut down or at reduced capacity. And even the businesses that are still open are suffering from social distancing. So, this begs the question: how are businesses surviving the coronavirus?
In Short: Not Well
Small businesses are faced with a frustrating premise: They need to keep paying rent and utilities, but they may have their doors shut entirely, or be running at a limited capacity. For small business owners and family businesses, this can drain cash reserves very quickly.
This has led to many businesses trying to adapt and innovate. Restaurants are switching over to delivery models even when they didn’t previously have delivery models. Hobby stores and game stores are starting up streams and trying to keep their audiences interested. Distilleries have switched to hand sanitizer.
Low or no contact delivery is the way to go for many business owners, even retail businesses that are still allowed to be open. But this still leaves social venues, such as bowling alleys, without a clear path to continued monetization.
Businesses which innovate are more likely to come out on the other side of the coronavirus than businesses that cannot. But businesses that are based around gatherings are very likely to collapse entirely, especially with the CDC advisement that gatherings should be put off until May 15.
SBA Loans May Come Too Late
New SBA loans and bridge loans are being approved to make sure that businesses have the capital they need to survive, but there are some issues with this. For one, each state has to go through a certification process with the SBA, it isn’t automatic, so some areas that are “disaster zones” aren’t covered under the SBA yet.
For another, the SBA loans do take time to prepare, and the additional funding for SBA loans may not clear for a few weeks. Some businesses are already running out of money.
The “Winners” During the Pandemic
Every company understands that the pandemic isn’t something to profit from. Even Amazon has taken both automated and manual action to reduce the potential for price gouging. Despite that, there have been some clear “winners” in the area of business.
Amazon is hiring 100,000 more people to fulfill demand as people eschew grocery stores and order things online. Netflix, Hulu, and other streaming services are seeing additional sign ups as people look for something to do. And Wal-Mart and other grocers have seen incredible sales volumes as everyone stocks up, though it’s unknown whether that may taper off later as people try to get through their hoards.
Large businesses are weathering the storm, but small businesses are likely to see some closures in the coming months. Though there may be some SBA relief, it’s going to come too late for a lot of companies that were already cash-strapped, especially local restaurants. Unfortunately, small business forms a great portion of the economy, so we can look forward to some economic struggles regardless of the relief efforts.