It all happened so fast. Just last month, the name “Coronavirus” inspired memes about beer and toilet paper. Now, it’s no longer a joke. Every day, hundreds of people are dying in NYC area hospitals. Soon, more than a thousand people may perish daily.
To ensure our health care system remains intact, NYC is now under a de facto lockdown. This government order has forced any business deemed as non-essential to close. With no clear idea when authorities will lift this order, companies here are in a tight spot.
Economy-wide layoffs caused by the shutdown are making things even worse. With no income security beyond next month, people are locking down their bank accounts. For businesses that are still permitted to be open, like restaurants, this is horrible news.
With tight margins, 77% of businesses worry that they won’t be able to make it. Hard numbers justify their concerns – according to Harvard Business School, the average Main Street business has only 27 days of cash on hand.
More than ever, your operation needs help. How can you ensure its survival beyond this crisis? In today’s post, we’ll explore practical measures that will help keep your enterprise afloat.
NYC: The Epicenter of COVID-19 In America
Our city is the Crossroads of the World. Here, you’ll find ethnic communities from every corner of the planet. Over 800 languages are spoken on our streets. And every day, over 169,000 passengers pass through JFK.
Frankly, it was inevitable that New York City would become an epicenter of Coronavirus. Despite the Tri-State Area being at high risk for an outbreak, we nonetheless sleepwalked into the current crisis.
Just as some beachgoers will take pictures of an approaching tsunami, we stared blankly as a wave of disease swept around the world. We looked on with curiosity as COVID-19 consumed China, forcing it to enact a lockdown. With concern, we watched it jump to Iran, then South Korea.
Then, it landed in Italy. As it spread like wildfire through the mother country of many New Yorkers, we became uneasy. Then people started getting the virus on Caribbean cruises.
The first American case popped up in Washington State on January 20. Then, it found its way into a nursing home in February, infecting three-quarters of its residents. Ultimately, 35 would die of COVID-19.
Then, Coronavirus landed on our doorstep. A New Rochelle lawyer came down with COVID-19 on March 2. The man, who worked in Manhattan, had no recent travel history, nor any contact with a known COVID patient. He was the first case of community spread. The virus had arrived in the Big Apple.
And yet, our lives went on as usual. But, not for long – by March 10, his case spawned 108 cases in New Rochelle alone. On that day, the official tally counted 36 instances in NYC proper. By St. Patrick’s Day, it had soared to 814 cases. Two days later, that number exploded to 3,615 cases. As of the writing of this article (April 3), NYC health authorities had confirmed a staggering 56,289 cases of COVID-19.
With an uncontrolled exponential spread underway, measures thought unthinkable a month ago have been enacted. On March 20, by order of New York governor Andrew Cuomo, all non-essential businesses were forced to shut down. If you aren’t a grocery store, bodega, pharmacy, or any other shop deemed essential to life, you can no longer ply your trade.
Government Response To The Coronavirus Has Been Disjointed
Governance in this country is, to be frank, a mess. In general, most leaders kowtow deeply to special interests. As a result, this arrangement compromises their ability to respond to a true crisis. Case in point: As late as Mid-March, Mayor de Blasio encouraged citizens to go about their daily business, even as cases started to escalate.
The closure of nonessential businesses didn’t happen until Governor Andrew Cuomo stepped in. Although he too misjudged the nature of this pandemic, he has mostly responded in a coordinated manner.
As you might suspect, the response at the federal level has been, at best, shambolic. At first, President Trump referred to COVID-19 as just a flu. Then, as cases in Europe exploded, he banned flights to/from Europe (but, curiously, not from the UK.)
He has sent plenty of ventilators to states that elected him in 2016, while supplying token amounts for blue states. For New York State and Governor Cuomo, negotiating with the Trump Administration has been an exercise in frustration.
Sadly, this pattern of incompetence has also seeped into stimulus negotiations. For starters, the feds have routed the small business stimulus package, worth $349 billion, through the Small Business Administration (SBA).
On the surface, this sounds reasonable. But, the SBA has a reputation for being lethargic. Add millions of applicants to the mix, and payments might not reach recipients in time. Worst of all, the feds are charging interest on these loans, adding even more fiscal stress.
And then there is the primary stimulus bill. As a business owner, holding onto core talent is crucial. Initially, Congress was going to pass a version that only included a one-time $1,200 payment. For most New Yorkers, that isn’t even enough to cover rent.
Thankfully, Vermont Senator Bernie Sanders held up the bill until they passed his amendment. Thanks to his intervention, workers furloughed because of COVID-19 will get four months of unemployment benefits at 100% of their salary up to $75,000, plus an extra $600 per month.
Compare our situation to Australia’s financial response for Coronavirus. Down Under, their response has taken place without drama, and has been far more pragmatic.
Starting on March 12, the Morrison government announced 17.6 billion AUD in support straight away, which included 6.7 billion AUD in wage subsidies. On March 19, the Reserve Bank of Australia made 90 billion AUD available to banks so they could continue lending to small businesses. And, on March 30, they passed a massive 130 billion AUD bill, which provides 1,500 AUD biweekly per worker to businesses. In return, they keep people in their jobs and continue to pay them their wages.
Meanwhile, opposition members have been mostly supportive. Labour Party leader Anthony Albanese lauded the measures, but called for the government to implement with greater speed.
Small Businesses Citywide Are On The Brink
Meanwhile, in NYC, the lack of urgency from politicians is putting livelihoods at risk. Unlike corporations, most SMEs don’t have the reserves needed to survive a multi-month shutdown. As we mentioned earlier, most small businesses can only survive an average of 28 days.
Arcana Metals, a Queens-based interior design firm, has seen their cash flow drop from $20,000 to zero, almost overnight. To survive, the owner had to let four part-time employees go. But, even with that measure, they’re still staring down next month’s rent payment, without any idea how they’ll pay.
Things are looking bleak. According to Lisa Sorin, President of the Bronx Chamber of Commerce, 10% of businesses may permanently close. That is a conservative estimate.
What Aid Programs Are Available?
As the effects of COVID-19 have ripped through the NYC business community, governments and other organizations have set up relief programs.
The best-known one, the SBA Disaster Loan Program, offers up to $10 million in funding at a low-interest rate. However, thanks to a lack of preparedness, the current backlog is considerable. If you can’t wait indefinitely for help, there are other resources.
The municipal government of NYC has set up the NYC Small Business Continuity Fund. If your operation employs less than 100 workers, and have seen revenues drop by more than 25%, you qualify for up to $75,000 in funding. These loans are interest-free and come with terms of 15-20 years.
NYC is also funding an Employee Retention Grant Program. Your business must employ less than five workers and must have had revenue fall by more than 25% to qualify. If you meet these criteria, you can get up to $27,000 in grants to cover 40% of payroll for up to two months.
Private enterprise is also getting in on the act. Google has set aside $800 million to give away as grants to SMEs. Of that, $340 million will be made available as ad grants. Another $200 million will help NGOs and financial institutions provide small business with capital.
Current Relief Efforts Are Welcome, But Need To Improve
While we lost valuable time to the antics of grandstanding politicians, government agencies are finally setting up relief funds. This development is, unquestionably, a good thing.
However, we need our representatives to be better. We are going through an unprecedented time. Relief funds, like the SBA Disaster Loans Program and those set up by NYC, are getting bogged down by red tape.
Funding, be it for businesses or workers, could take weeks or even MONTHS to start flowing. By then, countless entrepreneurs could find themselves out of business and evicted from their homes. Their customers will suffer the same fate, rendering them unable to fuel the post-pandemic recovery.
There are several ways government agencies can streamline the process. First, minimize/eliminate means-testing for stimulus funds. We’re in a pandemic – all pretense of “being responsible with taxpayer dollars” should be abandoned for now. Our top priority should be to get cash in the hands of those who need it quickly. By streamlining paperwork, processing time will decrease drastically.
Second – favor grants over loans. Roght now, at this moment, businesses are fighting for their lives. Right now, payment plans should be the last thing on an owner’s mind.
Third – If the feds insist on loans over grants, make the money interest-free, with long repayment terms. This is where de Blasio got it right – but we need these terms attached to the SBA funds as well.
Enough With The Platitudes – It’s Time For Action
We’re all in this together. No doubt, you’ve heard this phrase spouted liberally over the past few weeks. But, are the actions of our representatives living up to this high-minded ideal?
While much good has been done recently, we need to push even harder in the days to come. If we do, we can ensure that no citizen or business gets left behind.