Our economy is only as strong as our small business community

If there is one overarching economic lesson the coronavirus pandemic has made clear, it is that the strength of America’s economy depends heavily on the success of small business.

Over the past three months, we have watched as small businesses across the country display closed signs in their windows, entire Main Streets are shuttered, employees have been let go en masse, and for those lucky enough to still conduct business during this time, revenues are down at staggering rates.

Our country is now mired in a deep recession that is expected to take a decade to fully recover from.

Testifying before the Senate Small Business Committee this week, Treasury Secretary Steven Mnuchin said that he was pleasantly surprised by the May jobs report as an indication that unemployment rates have bottomed out and the economy is on the rebound earlier than expected. However, the simple fact is that small business continues to suffer.

At pre-pandemic rates, small businesses employed 58.9 million American workers. Since the pandemic began, small business employment has fallen by 11 percent. According to a recent report from ADP Research Institute, employment among small businesses with less than 50 employees has dropped by nearly 6.5 million jobs since the middle of March. The small business numbers suggest that even on the backdrop of an economy that is reopening, millions of Americans are still losing their jobs or learning that they do not have a job to go back to.

Already, hundreds of thousands of small businesses–especially those owned by black and Latino entrepreneurs–are projected to close their doors forever, and 4 in every 10 small businesses made permanent layoffs as a result of the pandemic.

Yet these numbers do not paint the full picture of what we are facing. In my line of work, I have heard from thousands of business owners about how they are struggling, and each story is as heart wrenching as the next. Some have raided their retirement and personal savings, others have refused paychecks so they can pay their employees, and more than I care to admit have shared that they are on the verge of bankruptcy.

While many have received assistance through the federal Paycheck Protection Program (PPP); most do not believe that PPP alone will be enough to sustain their business in the long run. In fact, 44 percent of business owners in our network have reported that once their PPP funding runs out, they are likely to have to lay off their staff again.

Take the story of Anastasia Mann for example. Anastasia has owned and operated a travel management company in California for 33 years. Prior to the pandemic, her business did millions in revenue annually, but now everything is at a standstill. To stay afloat, Anastasia has invested the entirety of her 33 years of savings into her business, despite receiving PPP. But PPP and her savings still leave the business short of what it needs. Anastasia’s industry has been hit especially hard and she has no expectation of income returning until the first quarter of 2021. She has already used half of her PPP, and without additional assistance will not have enough money to stretch beyond the third week of June.

Her story is one of the millions, and demonstrates the need for immediate additional federal assistance to get small businesses back on their feet. Recent reforms to make PPP more flexible for business owners will not be enough.

During Wednesday’s hearing on PPP, Mnuchin acknowledged the economy needs more money to pull out of the recession, but in the same breath, he said the administration plans to spend the next 30 days looking at what should go in the next relief bill.

Business owners like Anastasia don’t have 30 days to wait.

There are actions that could be taken immediately to help small businesses. First, with $130 billion remaining in PPP’s coffers and just weeks left before the June 30 deadline for all new PPP applications, struggling businesses should be allowed to take a second loan. Second, the administration should announce automatic forgiveness for all loans under $150,000 to alleviate confusion about if and how loans will be forgiven. Third, Congress should enact a more comprehensive small business stimulus program that includes a sizable, direct grants program for businesses with up to 100 employees.

If these decisive actions are not taken quickly, we will be faced with a wave of small business closures. As the pandemic has taught us, our economy quite frankly cannot withstand a weakened small business community.

John Arensmeyer is the founder and CEO of Small Business Majority, a national small business advocacy organization with a network of 65,000 small businesses.