Small businesses vital to recovery hammered

WINCHESTER, Va. — In a normal year, hundreds of book lovers would have descended on this community this summer for Shenandoah University’s annual children’s literature conference.

Some would have made their way to Christine Patrick’s bookshop downtown. Winchester Brew Works would have rolled out kegs this month for Oktoberfest revelers. The Hideaway Cafe would be advertising its monthly Divas Drag Show.

But 2020 is no normal year. The literature conference, Oktoberfest and drag shows all have been canceled — casualties, like so much else, of COVID-19.

The pandemic has hammered small businesses across the United States — an alarming trend for an economy that’s trying to rebound from the deepest, fastest recession in U.S. history.

Normally, small employers are a vital source of hiring after a recession. They account for nearly half the economy’s output and an outsize portion of new jobs.

About one in five small businesses have closed, the data firm Womply reports.

Small companies are struggling even here in a city of 28,000 that works hard to promote and preserve local enterprises. But city planning is no match for a global pandemic.

“We’re in such a weird, weird time,” Mayor John David Smith Jr. said. “Small businesses and families are hurting.”

When the pandemic struck in early spring, the American economy fell into a sickening freefall as businesses everywhere shuttered and consumers stayed home to avoid infection.

Even though hiring has partly rebounded, the United States still is down 10.7 million jobs since February.

Lacking the credit access and cash stockpiles of larger companies, small businesses were especially vulnerable to the economy’s sudden stop.

Many crumpled under the pressure. Yelp, which publishes reviews of restaurants, bars and other businesses online, reports nearly 164,000 businesses on its website have closed since March 1 — 98,000 of them permanently.

Steven Hamilton, an economist at George Washington University, estimates 420,000 U.S. small businesses had closed permanently by July 10.

And small businesses’ troubles aren’t confined to their owners. They generate nearly 44 percent of U.S. economic output, according to the Small Business

Administration, and account for two-thirds of new hiring. (The SBA generally defines small businesses as those that employ no more than 500 workers.)

In addition to their economic impact, small businesses define communities.

“Let’s talk about the tapestry of people and communities,” said Andre Dua, a senior partner at the Mckinsey consultancy, who has studied COVID-19’S impact on small businesses. “What is Newyork without its restaurants?”

Government did scramble to protect small businesses. In addition to expanded unemployment aid, Congress approved the Paycheck Protection Program, which provided $520 billion for 5 million businesses, most of them small.

But Congress has failed to agree on another financial rescue. Without further federal aid, economists warn the recovery likely will falter and intensify pressure on small businesses that are straining to survive.

To hang on, many small businesses have tried to reinvent the way they do business, doing deliveries and letting customers pick up purchases.