Protect Small Biz in COVID Recovery
August 25, 2020 by
Small business has always had a reputation as the backbone of the U.S. economy. The devastating economic toll of the coronavirus pandemic cannot be overstated.
As mayors and county executives navigate the recovery phase of the pandemic — attempting to protect lives and livelihoods — the big questions are how to bring businesses in their community back, stimulate investment, protect jobs, and restore vital revenue sources. Special attention must be paid to preserve their key economic drivers: small business.
The common issues small businesses may encounter, according to the U.S. Small Business Administration, include access to capital, workforce, and inventory; retrofitting facilities to protect customers and staff; insurance coverage; and market demand, among others.
Economists project more than 100,000 small businesses have permanently closed since March, according to a study by researchers at the University of Illinois, Harvard Business School, Harvard University, and the University of Chicago. Communities of color and vulnerable populations are the hardest hit segments of the U.S. population. On the economic front, “the number of black businesses owners in the U.S. dropped by 41% between February and April to 640,000, compared to a 17% drop in the number of white business owners,” according to a Reuters report published in June.
Insurers, if required to pay out coronavirus-related claims, could be on the hook for an estimated $1 trillion a month, according to estimates from the American Property Casualty Insurance Association.
Economic indicator data, such as employment claims and business closures, may be a holy grail of recovery, but the challenge is in determining the extent of the impact on businesses, sales, and employment in a community. City and county government leaders have several tools in their arsenal that are essential to round out any economic development indicators, and they can use this data to focus their effort as recovery picks up. The data includes:
- Revenue from business licenses by application status — actual revenue is important, but so is a view into what’s pending
- Permit applications revenue, also by application status and by type or class — significant attention is paid to commercial permit and plan reviews as this constitutes a significant portion of city development revenues
- Time-to-process and backlog data to monitor the flow of applications through the system
- Code enforcement cases because most of that work is critical to the health and safety of the community
- Inspection data — inspections are often a gating factor to complete projects while ensuring compliance with code
Combining that data with third-party data can create an even clearer picture of fiscal and economic recovery. Womply, for example, is widely quoted on important indicators of revenue transactions and consumer spending in hard-hit sectors — retail, travel, and dining. Some credit card companies have also reached out to cities to share data around economic spending, which helps forecast city and county economic status.
It’s important to remember communities are complex fabrics, which each stitch depending on the one before it. Take, for instance, an example recently highlighted in a New York Times article. A minor league baseball team leases a city-owned stadium, but without games, the team doesn’t have the revenue to make lease payments. This, in turn, “could threaten municipal bond payments and even the urban renewal plans that rely on minor-league baseball.”
Overcoming the challenges created by this health crisis will not be easy. As government leaders across the U.S. grapple with how and when to open economic activity in the coronavirus era, protecting small business should be a focus in every recovery strategy.