Opinion: Small business survival the key to recession recovery

Opinion: Small business survival the key to recession recovery

Taco Times (Perry, Florida)
September 2, 2020

By Frank Knapp Jr.

Recently I travelled through Florida visiting rural communities like Monticello, Lake City, Perry, Chiefland and Okeechobee.

These are not the typical areas of focus for most national business organizations.

However, Small Business for America’s Future believes that the small businesses in these more rural communities are just as important to our nation’s economy as their more urban counterparts.

So, what did I find?

What I did not find were the corporate offices of Apple, Facebook, Amazon, Google, Microsoft, and Netflix—the Fortune 500 companies that have lifted the stock market to a record high.

President Trump has pointed to the S&P 500 as an indicator that the economy is roaring back.  But without these six companies, the stock market is down four percent.

Outside Wall Street, the real economy is much worse.

What I did find on my travels were small business owners working hard to survive this pandemic recession.

Not all laid off workers have returned to employment. Nationwide over one million new unemployment insurance claims were filed the week ending August 22 bringing the total number of unemployed workers to about 27 million.

Yes, the federal Paycheck Protection Program did give about 5 million small businesses forgivable loans to keep workers on the job. But there are over 30 million small businesses in this country.  In Florida only 16 percent of small businesses received these loans.

That loan program is now ended.  There will not be any additional federal financial help for any small businesses until possibly October.

The $600 enhanced weekly unemployment benefits from Washington also ended a month ago.  This has resulting in the average American, laid off temporarily or permanently, receiving only $333 a week in total unemployment insurance benefits in August.

With less money to spend and concerns about a floundering economy, Americans are now spending less on groceries—a telltale sign of dropping consumer demand for goods and services.   Consumer confidence is now the lowest since 2014.

This is a serious problem for small businesses because consumer demand is always their top concern.  When it drops, small businesses suffer. That is why, according to our polling, most small business owners supported the $600 weekly federal unemployment benefit.  Only a small number of respondents felt that these benefits were stopping workers from returning to work, an urban legend that is unsupported by the facts.

So, what needs to be done now for small businesses?

Prior to the federal government enacting any fiscal stimulus efforts earlier this year, Small Business for America’s Future was advocating for money to be pumped quickly into local economies.

For small businesses we wanted grants, not loans, to help all to survive.  For workers who lost their jobs we proposed federal dollars be added to state unemployment benefits to enable them to pay their essential bills and help keep Main Street afloat.

We believed that this was the path to enable local economies to survive the recession as we waited for the pandemic to be over.

Unfortunately, White House inaction, especially in the early months of the pandemic, has allowed Covid-19 to continue to spread and the recession to go on.

Consequently, the needs of small businesses and local economies are the same now as they were in March and April.

This time we need the financial help to small businesses to include all of those that did not receive any federal aid before.

We need Congress to quickly reinstate the enhanced federal unemployment benefits until the end of the year to give workers still looking for a job and all consumers confidence that the economy will not get worse.  The President’s Executive Order is insufficient, confusing to the states and simply not getting the job done.

Eventually we will get through this pandemic and recession.  But we do not have to wait until then to address the other priority needs of small businesses.

Healthcare costs must be reduced.  There must be greater access to capital for entrepreneurs and small businesses.  Tax reform must be fairer to small businesses and really grow the economy, unlike the 40 percent corporate tax rate cut in 2017 that only benefited shareholders and corporate executives.

We need our small businesses to lead us out of this recession by quickly hiring when the virus is under control.

But to do that we must make sure they survive.

Frank Knapp is Co-chair of Small Business for America’s Future and President/CEO/Co-founder of the South Carolina Small Business Chamber of Commerce.