Despite steadily rising production costs, higher market returns have offset an increased cost base and…
Report finds majority of small businesses need government help to stay open
Before the pandemic hit, 2020 was on track to be a record-breaking revenue year for Jamaican Patty Co., owner Du’Sean Howard said. The 3-year-old restaurant, specializing in meat and buttery pastries packed with vegetables, ended the year down from about $ 15,000 to $ 20,000 in expected revenue.
“We had so many events that were canceled with the food truck. We were on a real roll, ”Howard said of the mobile restaurant, which launched in 2019.
Some early changes, like using Uber Eats and Grubhub delivery services, saved business when ordering home, he said. And bringing in family for work has cut costs. Howard said he did not apply for paycheck protection program funding, but received an economic disaster loan.
“We have found creative ways to generate income. It’s a family business, so we were able to help each other, ”he said. “We took a hit like everyone else. I don’t think we’ve been as hurt as some of our other community restaurants that rely on large staff. “
While Howard has said he hopes the business will survive the pandemic, other restaurants have suffered devastating blows.
Tequila & Mezcal Mexican Cuisine and Bar co-owner Sofia Pavon-Wilson said she closed the restaurant in July 2020. In February of last year, she opened the recently renamed family business with eight employees.
“I wasn’t going to let my family drown in thousands of dollars [of debt] just to maintain something that wasn’t even making business, ”Pavon-Wilson said. “If we could have had people inside, we would have been great. “
She said the company did not get a PPP loan, but received a loan equivalent to one month’s rent from the US Small Business Administration.
“Because I’m so young and don’t have a huge credit history, that was a big deal too,” she said of access to capital. “It wasn’t meant to be, and we accepted it.”
Small Business Perspectives
Even with vaccine delivery underway, the United States Chamber of Commerce reported in December that most small business owners nationwide believed the worst of the pandemic was yet to come and that half of the businesses saw their operations continue in the current economic climate. Three-quarters of small business owners say more government help is needed to stay open, according to the U.S. Chamber, a figure that rises to 83% among minority-owned businesses. Minority businesses are defined federally as businesses that are more than 50% owned by Black, Hispanic, Asian, Native American, or female entrepreneurs.
The latest federal stimulus bill, which began rolling out last month, is in part aimed at supporting minority-owned businesses and the smallest of small businesses. The latest round of PPP funding through the SBA has set aside at least $ 25 billion for borrowers with up to 10 employees or those in low- and moderate-income neighborhoods. The Coronavirus Aid, Relief and Economic Security Act released last spring has not effectively reached minority communities, according to some economic reports. A New York Federal Reserve report found that PPP loans reached only 20% of qualifying businesses in states with the highest densities of black-owned businesses, and in counties where business activity was high. the densest, its coverage rates were generally less than 20%.
Missouri State University economist David Mitchell said reports reveal that most minority-owned businesses are in service sectors, which have been particularly affected by the pandemic. He said minority business owners also tend to have less wealth and capital, which affects their ability to get through these mandatory closings.
“Big business will get away with it. Small businesses will be the hardest hit, ”Mitchell said. “The more people get used to not going to restaurants (and) the more they get used to buying all of their stuff on Amazon, the less likely they will go back to retail and Joe’s restaurant. You want this thing to end as quickly as possible.
The US Chamber study finds that only a quarter of small business owners believe the economic climate will return to “normal” in less than six months, and 56% predict it could take up to a year.
Make it through
Day Curtiss, owner of Dayora Salon at Sola Salon Studios, said she applied as quickly as she could for a PPP loan last spring, but missed the first round of funding. She then received the grant once additional funds were added. Additional help came in the form of unemployment benefits during the six-week stay-at-home order and when the owners of Sola Salon Studios waived the rent payment.
“It was huge and it was a great relief,” she said, adding that her business model also helps keep the show open. “I happen to be very lucky and very lucky because I’m in a private studio. When the pandemic hit, people were uncomfortable going to bigger living rooms. I am thankful that people have supported my small black owned business.
She estimates that activity fell by 22% in 2020 compared to 2019. She is still considering funding through the last cycle of PPP.
Curtiss said that as a sole proprietor, navigating the rules and red tape for government assistance was a challenge, and she wished there were more resources available for small businesses.
“When you’re a one-chair salon, you’re your marketing, your sales, your orders,” she said. “There is no single source, and it seems there is nothing affordable.”
Mitchell echoed this small business challenge and added that he supports the government trying to target smaller small businesses with the latest funding.
“You really have to target restaurants that have seen their hours considerably reduced. Or the barber, they can only have one client at a time, ”he said.
“If these companies close, eventually they will come back, but it will be five or six years later. … It will be much more difficult to bring them back. I’m breaking my standards and saying they need to do more to help businesses. “
Bombay Bazaar co-owner Nirav Patel also received PPP funds and said they were needed to keep the business open. The small Asian grocer said it remained open as a core business but temporarily cut back hours to save staff costs and time to clean up the store, which opened. doors in November 2019.
“A lot of people are reluctant to go out just because they want to stay safe,” he said. “If they came, they would do their shopping pretty quickly. “
He said although his customer base has remained somewhat stable, wholesale accounts with restaurants in the area have fallen by about 25-40%. And supply chain issues have made inventory management difficult.
“I get a lot of my groceries from India so once India went into lockdown I had a lot of people who came because they wanted to stock up on lentils, rice and flour, ”he said. “It affected me more than anything else because we aren’t getting a lot from India now.”
The pandemic has put Patel’s plan to open a snack bar inside the grocer on hold, but he said being a core business helps the new grocer stay open.
“Everyone needs to do their shopping,” he says.