Washington, D.C.— Today, small business owners and public health experts testified before the House Small Business Committee on the impact the novel coronavirus is having on small firms and the threat the outbreak poses moving forward. Chairwoman Nydia M. Velázquez (D-NY) called the hearing in the wake of the passage of an $8.3 billion emergency supplemental, which included a provision that enables the Small Business Administration (SBA) to make an estimated $7 billion in low-cost loans to affected small businesses.
“Here in the U.S., because small businesses make up over 99 percent of all employers, we can expect that many will face hardship from this public health crisis,” said Chairwoman Velázquez. “We should all be focused on preparedness, working together in a coordinated way, and providing accurate, reliable information to our small businesses and the American people. In the end, the stakes are too high, and the federal government cannot afford to get this wrong.”
On January 30, 2020, the World Health Organization (WHO) declared a global health emergency over novel coronavirus, known as COVID-19. The virus has infected over 110,000 people and killed more than 4,000 worldwide. The crisis is expected to hit the economy hard, and many economists have already revised their growth forecast downward for the year ahead. With small businesses making up over 99 percent of all U.S. businesses, coronavirus threatens to upend the small business economy, leaving many businesses forced to make hard decisions over laying off workers and even shutting down. In today’s hearing, small business owners from the retail and tourism industries testified that they are already seeing impacts on their business in the form of decreased consumer demand and fractured supply chains.
Asian-American small businesses have especially felt the effects of COVID-19. As the virus has spread in the U.S., Asian-American business owners have reported increased instances of xenophobia due to misinformation about the virus. This decreased patronage has had a devastating impact on some Asian neighborhoods. Business in New York City’s Manhattan Chinatown has already reportedly dropped 40-50%
Throughout the hearing, members discussed how small firms are faring in the face of COVID-19 and what additional measures Congress could take to soften the economic blow from the crisis.
“Small and Medium-sized Enterprises (SME’s) are financially more fragile and cash-strapped when market demand is down,” said Dr. Jennifer Huang Bouey, Senior Policy Researcher at RAND Corporation. “Emergency funding programs that target SMEs could be one important component of a response. Lower interest rates, deferred or waived taxes and fees, or easier lending policies could also help SMEs stay afloat during the period of low market demand.”
“As of today, our 2020 sales are down 20 percent year-over-year. We are seeing a 37 percent decline in international travel, and that is worsening by the day,” said Jay Ellenby President, Safe Harbors Business Travel in Bel Air, MD. “We expect March to be devastating and are preparing for sales to be down by far more than 20 percent year-over year. For April, we can only hope. We are having to start painful internal conversations about staff structure and size.”
“There are articles every day about small businesses trying to make ends meet due to the sudden decline in patrons,” said Andrew Chau, Co-Founder & CEO of Boba Guys. “The economic hardship on each business owner then trickles down to the labor force as many places are letting go of their employees to cut costs. The destabilization of labor and discretionary income will have ripple effects throughout our economy, well extending outside our community.”
“Moving forward, it is our priority to do whatever we can to help those small businesses that will disproportionately suffer economic harm,” said Chairwoman Velázquez. “But we must also realize this is a public health issue as well and I encourage everyone to plan, prepare, and to not panic. I urge colleagues on both sides of aisle and the Administration to work together on a coordinated, government wide plan to respond to the Coronavirus.”