South Florida Sun-Sentinel (Sunday)
New risks for small businesses
NEW YORK — As the U.S. economy undergoes an uneven recovery from the coronavirus pandemic, many small-business owners face a tough decision on whether and when to take on employees.
The pandemic forced Meghan Gardner to let go of 16 staffers at Guardian Adventures, which ran educational summer camps, part of an industry decimated by the outbreak. While Gardner got a Paycheck Protection Program loan and ran online camps in the summer, by October she couldn’t afford to pay her employees.
Gardner would like to build her company back up, but the virus is still raging and the future for children’s group activities is still uncertain. She’s worried about the summer of 2021 being a repeat of 2020.
So, for the time being, she’s working as a consultant and holding off hiring.
“If I don’t have my business up and running and make enough money to pay my employees, I’d have to lay them off again,” says Gardner, whose company is based in Burlington, Massachusetts.
Owners such as Gardner who are rebuilding a business or starting anew after losing their companies
are hesitant to make hiring commitments because it’s unclear not only when the pandemic will end, but whether they’ll have enough revenue to justify bringing employees on.
For many owners, it’s a question
of how comfortable customers will feel about gathering in places like restaurants, stores and gyms. Retailers don’t know yet how much business they’ve permanently lost to online competitors. For owners starting over, it’s too soon to know if their brand-new companies will be successful enough to take on employees.
Small businesses accounted for 47% of employment at U.S. companies, according to the most recent business census, in 2017. When payroll company ADP reported the pandemic forced the loss of 19 million jobs at its business customers in April, more than 10 million of those workers were let go by companies with fewer than 500 workers.
Since then, small businesses have added 6.2 million jobs, the most recent ADP data show.
A new $284 billion round of PPP funding could give small business hiring a boost, although owners will have more leeway to spend the money on rent, marketing and other expenses than they did in earlier rounds.
Through January, the SBA approved over 891,000 loans in the new round, totaling nearly $73 billion. More than two-thirds of the loans were for $50,000 or less, a sign the smallest businesses were seeking aid. In the first two rounds of funding last year, the government guaranteed 5.2 million loans worth $525 million.Newly sworn in Treasury Secretary Janet Yellen testified at her confirmation hearing last month that it’s “critically important” to help small businesses with loans including those offered by the PPP.
“We will do everything we possibly can to get that money out to struggling businesses effectively,” she said.
About 1 in 6 small businesses have closed their doors since the pandemic began, according to data from UKG, a work scheduling software company. That points to a reduced base of small employers who will be able to rehire when ongoing vaccinations are able to bring the virus under control.
Even business owners who are hiring, such as restaurants looking forward to reopening when it’s safe to have indoor dining, are cautious.
Bret Csencsitz hopes to reopen the Gotham Bar & Grill by the summer if government regulations permit, but he expects to have 35 staffers instead of the 100 the Manhattan restaurant had before it closed in March.
“We simply don’t understand what the marketplace is going to look like,” says Csencsitz, the restaurant’s managing partner. But as diners return, he hopes to quickly bring on more employees.