Speaker 1: It's the American dream. Entrepreneurs across the country starting their
Speaker 1: own business. It's the biggest job creation vehicles the nation
Speaker 1: has ever seen. Small businesses are credited for two thirds
Speaker 1: of all US jobs over the past decade. These companies
Speaker 1: came into the year with a head full of steam.
Speaker 1: Then the coronavirus hit and the momentum just stopped. A
Speaker 1: full forty of small businesses do not think they're going
Speaker 1: to survive. They're just a lot of smaller businesses that
Speaker 1: will struggle to make it through this winter. It's all
Speaker 1: local small businesses, that's who is bearing the brunt of this.
Speaker 1: We just don't know how long we might be able
Speaker 1: to stay afloat. Everybody's going to be out of work,
Speaker 1: and I'm just going to be deeper in debt. It's
Speaker 1: been very, very bad for a family for you know,
Speaker 1: the government programs were designed to bail out the big boys,
Speaker 1: but they left Main Street on. Since the start of
Speaker 1: the pandemic, we spoke to more than a hundred business
Speaker 1: owners across the country. Many shut their doors, some survived,
Speaker 1: some adapted, and some suffered personal tragedies while trying to
Speaker 1: keep their business afloat. This is their story. Thanks for
Speaker 1: joining us on this Bloomberg Radio special report examining the
Speaker 1: pandemics outsized impact on small business Si bassk and I'm
Speaker 1: John Tucker. It's been nine months since lockdowns hit much
Speaker 1: of the country and doors have reopened at a number
Speaker 1: of storefronts, but still two out of every five small
Speaker 1: businesses tell Goldman Sachs they're not sure if they all survive,
Speaker 1: and ten million people remain unemployed. We spoke to business
Speaker 1: owners across the country about their troubles, and there have
Speaker 1: been many, but perhaps the worst of those struggles is
Speaker 1: the personal tragedies that were endured. David Carberry runs a
Speaker 1: digital marketing firm headquartered in Baltimore. When the pandemic hit,
Speaker 1: his sales were nearly cut in half, and then his
Speaker 1: father caught COVID while going to the hospital for a
Speaker 1: simple procedure. It was in April. My dad had just
Speaker 1: had surgery in March and we had to put him
Speaker 1: into a unit just for physical therapy. Um he had
Speaker 1: god about a replacement and with them we weren't allowed
Speaker 1: to see him, and the facility caught COVID and he
Speaker 1: did They They took him to the hospital and he
Speaker 1: was on Evan for a couple of weeks. Unfortunately lost
Speaker 1: him like in the beginning of May, so it was
Speaker 1: pretty traumatic for us. Then there's literally Pacheco's whose translation
Speaker 1: business also suffered from the onset of the pandemic shortly
Speaker 1: after her father fell ill and she couldn't be there.
Speaker 1: On April sixteen, My dad was really really sick. Um
Speaker 1: he can hardly briefe we Um called the ambulance. He
Speaker 1: didn't make it. He didn't make it. He already had
Speaker 1: passed on the couch. Um. So I witnessed all of
Speaker 1: this on the video. Normally I would have been there
Speaker 1: in person, right and you know, were stuck in quarantine,
Speaker 1: and all I was able to do was just watch
Speaker 1: from from the video. So it was really hard. And
Speaker 1: so many cities across the country, there are hundreds of
Speaker 1: stories just like David's and Lilies. In their cases, personal
Speaker 1: tragedy coincided with business trouble, but more often we've seen
Speaker 1: the business trouble turn into a different kind of tragedy,
Speaker 1: employers having to shut the doors, laying off friends and family.
Speaker 1: For John's Grill in San Francisco, this year was the
Speaker 1: worst in the restaurant's one twelve year history, open since
Speaker 1: nineteen o eight, owner John Constant is the latest in
Speaker 1: our long line of constants to run the business. We
Speaker 1: spoke to him back in March. This is my first
Speaker 1: experience with something that's catastrophic. It's been very very sad
Speaker 1: for our family, for our staff specifically, so I had
Speaker 1: to get the staff together and have that very very
Speaker 1: tough conversation with them because most of most of our
Speaker 1: staff has worked with us for five years, ten years,
Speaker 1: fifteen years, thirty years, so we have a long ten
Speaker 1: years staff. It was the saddest day of my professional career.
Speaker 1: I think we're all pretty much a family in there.
Speaker 1: Most of these guys have seen me grow up as
Speaker 1: a kid, you know, and so it was it was
Speaker 1: a really tough tough time. We've got our staff on
Speaker 1: medical insurance until the end of April, and we will
Speaker 1: probably be one of the first restaurants open our doors
Speaker 1: for patrons once COVID nineteen is over. John's Grill did
Speaker 1: reopen and added seating outdoors, but just this month it
Speaker 1: was forced to close again. And underrepresented communities have shown
Speaker 1: to be some of the hardest hit in this pandemic,
Speaker 1: so our businesses that are black owned and women owned.
Speaker 1: The Bank Street Bookstore in Manhattan was founded and run
Speaker 1: by women, and after forty years, one of the last
Speaker 1: sellers of children's books in New York City is closing.
Speaker 1: I mean, we've been a corner stone of the neighborhood
Speaker 1: since we've been here for a most fifty years. We
Speaker 1: have folks coming in who remember coming when they were
Speaker 1: a kid and now are bringing their children, or people
Speaker 1: who live in the neighborhood who just had kids and
Speaker 1: are really sad that they won't be able to have
Speaker 1: their children grow up here. At the start of the pandemic,
Speaker 1: there was a big government push to rescue small business
Speaker 1: from financial ruin. Billions of dollars were made available through
Speaker 1: the Paycheck Protection Program, but firms that borrowed largely ran
Speaker 1: out of money by October. Margaret and Nadu works at
Speaker 1: Goldman Sachs. Her job is investing in underserved communities. She
Speaker 1: says more than forty percent of business owners had to
Speaker 1: layoff staff or cut jobs by November, and many said
Speaker 1: they wouldn't make it through the year. And it goes
Speaker 1: beyond the business owners. There's also fifty two percent of
Speaker 1: these small businesses that have foregone pay themselves, right, And
Speaker 1: it's not it's not like we can isolate small businesses
Speaker 1: like there's some aspect of the economy that's off to
Speaker 1: the side. When you have small business owners who aren't
Speaker 1: paying themselves, that struggled with your mortgage, that's a struggle
Speaker 1: with your rent, that's a struggle with how you pay
Speaker 1: for your health care, and so that impact on the economy.
Speaker 1: It's not a it's not a future issue. That's where
Speaker 1: we are now. And the real concern here is if
Speaker 1: that impact becomes permanent. Scott Minored at Googenheim Investments thinks
Speaker 1: it will be the p p P, which was a
Speaker 1: great program as an emergency stock gap. You know, of
Speaker 1: course it's gone, so you know we're going to start
Speaker 1: seeing layoffs here. And structurally, more than half of the
Speaker 1: Americans are employed by small to medium sized business um.
Speaker 1: A lot of those businesses are never coming back. Some
Speaker 1: won't make it out of the pandemic, but many will
Speaker 1: thanks to quick aid from the government. Back in March,
Speaker 1: the Paycheck Protection Program gave more than five billion companies
Speaker 1: a lifeline in the form of half a trillion dollars.
Speaker 1: In that cash helped Aaron Anchor's granola company in northern
Speaker 1: Maine get back on its feet after the early days
Speaker 1: of the pandemic. You know, you had to work with
Speaker 1: your local bank on that or your bank, you know,
Speaker 1: whatever bank used, and our local bank was phenomenal, so
Speaker 1: we just decided to go with what we knew. We
Speaker 1: furloughed about sixteen people and as of now, we've brought
Speaker 1: almost all of them back. Anybody that we could we've
Speaker 1: brought back. So it was very exciting and the PPP
Speaker 1: was very helpful that At the same time, small business
Speaker 1: owners say, p p P was also plagued by several hurdles.
Speaker 1: Some smaller firms found it difficult to even get a loan.
Speaker 1: We spoke with Brad Close, the president of the National
Speaker 1: Federation of Independent Business. You know, we saw a very,
Speaker 1: very poor rollout back in April um. The big banks
Speaker 1: mostly sent those loans to longtime customers, much larger businesses
Speaker 1: than a typical small business. You know, our average members
Speaker 1: five to ten employees. That's very common for small businesses.
Speaker 1: We are talking true small businesses, the one you find
Speaker 1: in communities all across America. They struggled to get the
Speaker 1: banks to pay attention to them. That frustration was rampant.
Speaker 1: In the early days of the program. Jim Smith applied
Speaker 1: for a p p P loan to help his advertising
Speaker 1: company in Irvington, New York. We did apply, and I
Speaker 1: think it's been well documented how frustrating and difficult that
Speaker 1: experience has been. You know, the bank that we were
Speaker 1: using was really prioritizing their private clients and basically telling
Speaker 1: their relationship managers not to help to facilitate the loan
Speaker 1: process for their smaller clients that don't have a minimum
Speaker 1: of ten million dollars in active business. So we'll see
Speaker 1: what happens. I know, everyone I know is really anxious
Speaker 1: about what's going to happen now with the next round.
Speaker 1: But let's just say that nobody really has any confidence
Speaker 1: when it comes to p p P loans. More than
Speaker 1: twenty five per cent of the money went to just
Speaker 1: one percent of the borrowers. Those are mostly large firms
Speaker 1: seeking loans north of a million dollars. Lots of people
Speaker 1: we spoke to had a tough time accessing the program.
Speaker 1: Small business owners like Frank Knapp described a wide range
Speaker 1: of hurdles. Franco owns a firm in South Carolina and
Speaker 1: also heads up the Chamber of Commerce in the City
Speaker 1: of Columbia. So there's no doubt about it that that
Speaker 1: P p P loans were important. But you know, only
Speaker 1: six all the small businesses in this country received a
Speaker 1: p p P loan out of the thirty million small businesses. Uh,
Speaker 1: it's a poultry amount. The people who were left out,
Speaker 1: the small business owners who were left out were sole proprietors, uh,
Speaker 1: they were micro businesses and a lot of those public
Speaker 1: the majority were people of color and women. They just
Speaker 1: didn't have the banking relationships to get a loan approved,
Speaker 1: or they didn't have the resources to go ahead and
Speaker 1: fill out the application appropriately, or maybe didn't even have
Speaker 1: the forms from the I R S to do it.
Speaker 1: So we've got major issues here. It's true that black
Speaker 1: owned firms have been disproportionately hit, and so have Latino
Speaker 1: owned firms. Westmore, CEO of the Robin Hood Foundation, has
Speaker 1: been working with corporations and donors to support those businesses.
Speaker 1: It is a massive problem, and frankly, it was something
Speaker 1: that we have been calling out for a while. Uh.
Speaker 1: And we even saw it when when the proposed Cares Act,
Speaker 1: the initial Cares Act was being pulled together because people
Speaker 1: will say, well, there was a cash assistance element to
Speaker 1: the Cares Act. That's true. However, the cash assistant elements
Speaker 1: of the Cares Act left out millions of people, and
Speaker 1: it left them out intention So, for example, if you
Speaker 1: were undocumented, there was no cash assistance element to the
Speaker 1: Cares Act for you. If you were part of a
Speaker 1: mixed status household, there was no cash assistance for you.
Speaker 1: If you were a student, even if you were working,
Speaker 1: there was no cash assistance element. If you were working
Speaker 1: but not making enough money to hit the income tax
Speaker 1: filing threshold, there was no cash assistance left for you,
Speaker 1: and even those that did receive assistance ran into issues.
Speaker 1: Bloomberg reporters Sally Bakewell spoke to dozens of business owners
Speaker 1: describing red tape that was both timely and costly. The
Speaker 1: business landscape in America is littered with stories like these.
Speaker 1: I spoke to the owner of a Vinyl records store
Speaker 1: in Columbia, South Carolina, and he had got a twenty
Speaker 1: seven thousand p p P loan, but he still had
Speaker 1: to dock his own salary to keep going. Um Or
Speaker 1: there was the owner of a all female boxing gym
Speaker 1: in North Attleborough, Massachusetts. She had her PP application handed
Speaker 1: straight back to her on the same day that she
Speaker 1: applied by the bank because they thought there was too
Speaker 1: much red tape UM and so she had to use
Speaker 1: her stimulus check to keep her business going. Um I
Speaker 1: then spoke to a business owner in Colorado and she
Speaker 1: was setting up a sustainable goods business UM and because
Speaker 1: of COVID, she lost her one contract because it was
Speaker 1: with a school who wanted to buy some of her
Speaker 1: sustainable trades for their cafeterias cafeterias, so she led for
Speaker 1: P p P and she applied for another type of
Speaker 1: emergency assistance loan. She had both of her applications rejected UM.
Speaker 1: She told me that one of them at one point
Speaker 1: they told her they had lost her application UM and
Speaker 1: that she needed to submit her financial details again and
Speaker 1: then when she went through all of that, there was
Speaker 1: no money left anyway. She was told there are stories
Speaker 1: like that everywhere. You know. They did, they did the
Speaker 1: right thing, They did what they could, they couldn't get
Speaker 1: the money, or they got the money, they still couldn't
Speaker 1: catch a break. Bank Street Bookstore in New York City
Speaker 1: was one of the many small businesses unable to access
Speaker 1: government aid. Caitlin Morrissey owns the fifty year old bookstore,
Speaker 1: which started out in the lobby of Bank Street College.
Speaker 1: Since we are attached to an educational institution, some of
Speaker 1: the relief that would have been available if we were
Speaker 1: a stand alone small business, unfortunately, it just wasn't available
Speaker 1: to us. So while we've operated fairly independently, we are
Speaker 1: under umbrella, so it affected what kinds of aid we
Speaker 1: were applicable to that The troubles spanned the country and industries.
Speaker 1: Alex Cuton ran a travel agency in Indiana and described
Speaker 1: similar roadblocks accompanied by a few answers. As a small
Speaker 1: business owner. You know, we're the last to get paid club.
Speaker 1: You know, we pay our rent, we pay our employees,
Speaker 1: we pay you know, everything that we owe and then
Speaker 1: if there's anything left at the end of the year,
Speaker 1: we get paid. And this year I don't look to
Speaker 1: be making any money. Now, have you applied for aid? Yes,
Speaker 1: during the time that the Cares Act ten thousand dollars.
Speaker 1: You know that we were led to believe that we
Speaker 1: would receive we applied for that immediately. Did I get it? No?
Speaker 1: And then the p P. P Whenever that program was
Speaker 1: announced and it came out, I applied immediately for that
Speaker 1: and did I get it? No restrictions tied to COVID
Speaker 1: nineteen have a small businesses across the country. Those that
Speaker 1: managed to stay afloat survived by tapping into government aid
Speaker 1: or by pivoting finding creative ways to survive or even
Speaker 1: thrive in the face of the pandemic. John Pepper is
Speaker 1: one of those small business owners. He runs a chain
Speaker 1: of eight modern Mexican restaurants in the Boston area, which
Speaker 1: he transformed to adapt to the outbreak. The Financial district
Speaker 1: of Boston became a ghost town almost immediately. We closed
Speaker 1: those four restaurants on the eighteenth of March. A week later,
Speaker 1: I put out a video essentially two days before I
Speaker 1: thought we had to close. The rest of everything staying.
Speaker 1: Instead of letting everybody know we had closed, I felt
Speaker 1: maybe I should let people know most likely we're going
Speaker 1: to close, because I didn't see any avenue to stay open.
Speaker 1: Turned out that that video caused a outcry of support.
Speaker 1: We raised over sixty dollars. We basically pimoted into a
Speaker 1: nonprofit model. For the last four weeks, we created this
Speaker 1: feed the front line, which now very ubiquitous term. But
Speaker 1: we ended up just keep the restaurants open to feed
Speaker 1: hospital workers throughout Boston and throughout New England. That's how
Speaker 1: we kept it going. Kim Strassner's business in Baltimore also
Speaker 1: disappeared overnight. She made personalized cutting boards that were popular
Speaker 1: as party favors. No parties meant no business. So what
Speaker 1: we did is we pivoted. We've joined up with two
Speaker 1: other local Baltimore companies and master seamstress Jill Andrews and
Speaker 1: Dan Jansen with Imperium Shaving, and we are making cotton masks,
Speaker 1: so we're using our laser engraver to cut the fabric.
Speaker 1: Jilly Andrews, she designed the pattern and that business is
Speaker 1: doing really well as you can expect. What is the
Speaker 1: difference in revenue from the traditional business to what you've
Speaker 1: pivoted to now, is that enough to sustain the business?
Speaker 1: You know, my husband locked his job, so we're you know,
Speaker 1: definitely as a household are income you know is down,
Speaker 1: and you know we're trying to pay our employees at
Speaker 1: fair price and sell the masks for a fair price.
Speaker 1: We're not gonna get rich off of this. You know,
Speaker 1: it's just we saw it need. It's not something you know,
Speaker 1: we're going to get rich off of. Kimi Strassner and
Speaker 1: John Pepper adapted to survive, but other entrepreneurs we spoke
Speaker 1: to made more dramatic changes that sometimes saw a business
Speaker 1: more than double. Alex Carroll ran a tailgate events business
Speaker 1: which ground to a halt when the NBA canceled its season,
Speaker 1: so he got creative. It was a sad moment. I mean,
Speaker 1: I won't lie. We spent a day kind of just
Speaker 1: laying around feeling sorry for ourselves, and then we quickly realized, hey,
Speaker 1: what can we do to get our employees back because
Speaker 1: we had to furlough all of them. And so that's
Speaker 1: when we started to think, when events do come back,
Speaker 1: what are they going to need. We knew they were
Speaker 1: going to need hand sanitizer stations, and that's when we
Speaker 1: started brainstorming and trying to come up with, you know,
Speaker 1: fully customized hand sanitizer stations. It's been incredible to see
Speaker 1: all the do for small businesses all over the country
Speaker 1: that will go on the website by you know, an
Speaker 1: automatic hand sanitizer dispenser package. They'll buy different types of
Speaker 1: sanitizer that we offer, they'll lie different types of stands
Speaker 1: and they'll all customize it with their logo and with
Speaker 1: that pivot business for Alex more than double business ideas
Speaker 1: tied directly to the pandemics seemed like an obvious shift,
Speaker 1: but some other less conventional ventures also saw big boosts
Speaker 1: during the outbreak. Paul Salek, for example, owns a flying
Speaker 1: school in Las Vegas. Amazingly enough, we've been busier than
Speaker 1: we've ever been. Um. I think people that can afford
Speaker 1: private aircraft travel have now given themselves permission to get
Speaker 1: the license that they always wanted to get so that
Speaker 1: they can take their family and their associates on personal
Speaker 1: travel around business travel as opposed to go into the airlines.
Speaker 1: So we've we've actually seen quite the uptick in aircraft
Speaker 1: sales and people learning how to fly. It sounds like
Speaker 1: people want to avoid commercial travel altogether and just do
Speaker 1: it themselves, and it's they think it's safe in that way. Yeah,
Speaker 1: instead of going through T s A and jumping in
Speaker 1: an airplane with the hundred fifty people you don't know,
Speaker 1: you get in an airplane with just those loved ones
Speaker 1: or those associates, and you can go, you know, pointing
Speaker 1: at a point B direct to your meeting and be
Speaker 1: home the same day. And it's always been available, but
Speaker 1: the cost of doing so has always been higher than
Speaker 1: the airline. But now people you know, for their own
Speaker 1: personal safety and those of their loved ones, um, I
Speaker 1: think they're giving themselves the okay to go ahead with it. Well,
Speaker 1: some pivots maybe permitted. Others are business owners just doing
Speaker 1: what they can to get through the crisis. Clayton B.
Speaker 1: Sean runs Kntina Lobos and Pellham, New York. His restaurant,
Speaker 1: like many others, had a pivot to a delivery model.
Speaker 1: It kept his business of flaw, but it's not sustainable.
Speaker 1: It's basically just to stop the bleeding of cash. The
Speaker 1: perfect storm was that state taxes were do last Friday,
Speaker 1: and we had to make the decision of you know,
Speaker 1: do we hold on to that cash and take the
Speaker 1: fines um later on so that we could stay open,
Speaker 1: or do we give them all that cash and only
Speaker 1: have a week's left instead of two weeks left of
Speaker 1: what we did? And we decided to take the fine
Speaker 1: and hold on to that to try to stay alive
Speaker 1: and pay that sales tax later. Luckily the states come
Speaker 1: down and as of now you're not gonna get fined
Speaker 1: for not paying sales tax. I bought us basically another
Speaker 1: week we can have. The hurdles are high for firms
Speaker 1: that old background back taxes at loans from the government
Speaker 1: that we're meant to keep them afloat. Government moratoriums on
Speaker 1: evictions and foreclosures are expiring in many states. The list
Speaker 1: of worries is long, and many storefronts now face fresh
Speaker 1: lockdowns until vaccines are widely distributed. John Pepper in Boston
Speaker 1: made the best of a bad situation, using his modern
Speaker 1: Mexican restaurants to feed frontline workers. He took hundreds of
Speaker 1: thousands of dollars and p p P loans, but the
Speaker 1: road ahead for his business is still uncertain. You kept
Speaker 1: people employed, we help them figure out how to apply
Speaker 1: for unemployment, and we ensured as soon as we knew
Speaker 1: we had the p PP nobody will be left behind.
Speaker 1: You are grateful that you did get a loan through
Speaker 1: the Small Business Administration, but it comes with some stipulations
Speaker 1: that really make you think about the future of the business. Yeah,
Speaker 1: that's for sure. How much of this sixty in our case,
Speaker 1: which is a lot of money that just sounds like
Speaker 1: a windfall at first at a glance, But how much
Speaker 1: of that will turn into a loan? And will we
Speaker 1: be able to generate the cash flow necessary to pay
Speaker 1: it back in a short eighteen month period once we
Speaker 1: have to start paying it And that by definition, if
Speaker 1: you do the math is going to be almost impossible
Speaker 1: for most restaurant companies if they don't go for full forgiveness,
Speaker 1: the amount left over as a loan will be a
Speaker 1: very challenging number to meet from a cash flow standpoint
Speaker 1: over the following a team months. The long term damage
Speaker 1: to small business has led to frustration aimed at Capitol Hill,
Speaker 1: as lawmakers took many months to negotiate additional aid. More
Speaker 1: than nineteen million Americans filed for unemployment. Meantime, the stock
Speaker 1: market rallied to records and the largest banks posted record
Speaker 1: results at some key businesses. Frank Knapp, a small business
Speaker 1: owner in South Carolina, is frustrated with the response from Washington.
Speaker 1: They all know, they all know that small businesses needed
Speaker 1: to be helped so that they can survive, because like
Speaker 1: after the Great Recession, it was small businesses who created
Speaker 1: the majority of jobs to get the economy back on track,
Speaker 1: not big business. But yet all we're concerned about is
Speaker 1: Wall Street. Uh, we all be concerned about Main Street,
Speaker 1: and ironically enough, Wall Street agrees Scott and minor manages
Speaker 1: more than two hundred billion dollars for Guggenheim investments. What
Speaker 1: the policymakers are doing here is leaving themselves open to
Speaker 1: another round of criticism, just like they got at the
Speaker 1: end of the financial crisis, which is the government programs
Speaker 1: were designed to bail out the big boys, but they
Speaker 1: left Main Street behind. We have permanently done damage to
Speaker 1: the job market which some other industry or future growth
Speaker 1: is going to have to correct for, and that's going
Speaker 1: to take a long time. Key figures in Washington also
Speaker 1: agree with Federal Reserve Chairman j Pale acknowledging the issue,
Speaker 1: and he sees more trouble ahead. They're just a lot
Speaker 1: of smaller businesses in their communities that will struggle to
Speaker 1: make it through this winter. COVID is moving up um
Speaker 1: and the cold weather people are staying in and it's
Speaker 1: gonna be tough. There are also frustrations aimed at large corporations,
Speaker 1: especially tech companies like Amazon and Google, which have benefited
Speaker 1: from the shift to online commerce. A report from Visa
Speaker 1: found that more than seventy percent of shoppers use most
Speaker 1: of their cash at places like Amazon and Walmart, whose
Speaker 1: founders are billionaires and who stocks have surged this year. Meantime,
Speaker 1: many small bisnesses don't have the infrastructure to effectively sell online.
Speaker 1: Jeremy Staffelman, the CEO of Yelp, is seeing this frustration firsthand.
Speaker 1: He also sees a wide divide and access to cheap debt.
Speaker 1: Businesses need supports, especially small businesses need support. And I
Speaker 1: think the initial stimulus package was a positive, and you know,
Speaker 1: we've been all waiting and hoping for another one. And
Speaker 1: I think, you know, we shouldn't just have socialism for
Speaker 1: big companies where they can borrow endlessly with cheap debt
Speaker 1: from the powered by the Fed. We we should extend
Speaker 1: a helping hand to all these great small business owners
Speaker 1: that are just trying to get by. Survey data from
Speaker 1: the Federal Reserve shows that lending standards to small and
Speaker 1: medium sized businesses are challenged. Bloomberg Sally Bakewell spoke with
Speaker 1: bankers across the industry to find out why it all
Speaker 1: comes down to one simple reason. Risk no one wants
Speaker 1: to lend to a business, but really you have no
Speaker 1: guarantee that it will exist in twelve months, So that
Speaker 1: concern was taking all of this risk, and I think
Speaker 1: that is why we saw at the beginning of programs
Speaker 1: like the Paycheck Protection Program that a lot of it
Speaker 1: went to the bigger, more sturdy, more well established clients,
Speaker 1: which meant that of course, again the smaller ones were
Speaker 1: shut out. Troubles for small business owners have ripple effects
Speaker 1: that hit all parts of the economy. If small firms
Speaker 1: don't survive, economists say workers could stay at employed longer,
Speaker 1: and right now small business is struggling to keep staff
Speaker 1: on board. On November, survey from Goldman Sachs found at
Speaker 1: least two and five were laying off staff or cutting
Speaker 1: employee pay. Romano Martin used her life savings to build
Speaker 1: and renovate a thirty four lane bowling alley in Brooklyn.
Speaker 1: She's open now, but operating at limited capacity to keep
Speaker 1: customers safe. And it's because we just don't know how
Speaker 1: long we might be able to stay a out. We
Speaker 1: have a lot of obligations and a lot of catching
Speaker 1: up to do. Have you applied for or received any
Speaker 1: government aid and what's that process. We have the p
Speaker 1: p P which allows us to hire our employees back,
Speaker 1: but of course with the type of rent that we're paying, um,
Speaker 1: it does not cover at all. I mean, we we
Speaker 1: have our life savings in this place, and we've improved
Speaker 1: it so much, and you know, with the video wall
Speaker 1: and the lighting, and it's just sad to see if
Speaker 1: we possibly have to give it up and close our
Speaker 1: doors for good. That Goldman sat survey we mentioned earlier
Speaker 1: also found more than half small business owners have stopped
Speaker 1: paying themselves and more than a third are dipping into
Speaker 1: personal savings to stay afloat. That was the case for
Speaker 1: Amy Wilson when we spoke to her. She owns an
Speaker 1: event space in Atlanta, Georgia. Revenue was plunging this summer
Speaker 1: during what normally would be her busiest months. We pay
Speaker 1: an average of ten thousand dollars of months for our
Speaker 1: expensive is including insurance and rent and water and internet.
Speaker 1: So we pay almost ten thousand dollars a month no
Speaker 1: matter what, and our biggest months or this summer because
Speaker 1: we have summer camps. And the lovely thing about us
Speaker 1: is we hire school teachers and art teachers, so it
Speaker 1: gives teachers and educators a great side huspital to work.
Speaker 1: A couple of weeks and everybody's going to be out
Speaker 1: of work, and I'm just going to be deeper in debt. Sadly,
Speaker 1: rent forgiveness for business owners has become an untenable issue
Speaker 1: as they're locked into leases while suffering significant sales declines.
Speaker 1: Frank Fellucci of Sweet Catch Cooke in New York saw
Speaker 1: sales plunge about you know, we were able to get
Speaker 1: some of the PPP money that has run out, and
Speaker 1: then I took out some of the small business emergency loans.
Speaker 1: You know, eventually that's going to run out as well.
Speaker 1: Until things get back to normal, whatever that new normal
Speaker 1: is going to be. Businesses are going to be hard
Speaker 1: pressed to continue and it's a it's a struggle. I mean,
Speaker 1: I'm gonna have to negotiated with four of my five landlords,
Speaker 1: which looks a good deal at the time, but now
Speaker 1: they're probably they're not workable. Is there a firm date
Speaker 1: by which you have to make some tough decisions? You know,
Speaker 1: I think landlords are willing to work with me. I
Speaker 1: can last longer, but if they're going to insist on
Speaker 1: a set round based on previous you know, pre COVID numbers,
Speaker 1: then I'm out of business. As businesses suffer, so do
Speaker 1: the local economies of the cities and towns where they operate.
Speaker 1: Brad Close, as president of the National Federation of Independent Business,
Speaker 1: When you look at the small business economy in America,
Speaker 1: it's the third largest economy taken by itself, in the
Speaker 1: whole world. We've created half the GDP for the country,
Speaker 1: in almost half the new private sector job. That's a
Speaker 1: very large swath of the total US economy and has
Speaker 1: the ability to impact large and small firms in every industry.
Speaker 1: Margaret and that Do runs the Urban Investment Group in
Speaker 1: Goldman Sachs. A full forty of small businesses do not
Speaker 1: think they're going to survive, and that is that's the
Speaker 1: highest number we've seen since April. So businesses have you know,
Speaker 1: they've expressed all of the creativity that they can, they've
Speaker 1: moved online, they've tried different strategies about revenue, but at
Speaker 1: the end of the day, without additional support, many won't survive.
Speaker 1: And these small businesses are interconnected. Take James Low, he
Speaker 1: runs the Baltimore School of Music with fifteen employees. Group
Speaker 1: classes were canceled because of COVID nineteen and people were
Speaker 1: less interested in virtual lessons. His firm was classified as
Speaker 1: an essential service because schools in the area didn't provide
Speaker 1: music lessons, yet his service was expendable when the pandemic
Speaker 1: hit in Baltimore. Can be kind of tricky because a
Speaker 1: lot of our public schools do not have music programs,
Speaker 1: so we do provide some essential services. We've also had
Speaker 1: a lot of our students who have been faking their
Speaker 1: own economic challenges that have had to pull back on
Speaker 1: any extra spending in their life. So we've had people
Speaker 1: that have been furloughed or have lost their jobs that
Speaker 1: have had to cancel their music lessons because of that
Speaker 1: as well. And we did apply for p p P
Speaker 1: and we were able to get that, so we've got
Speaker 1: a bit of a cushion. The problem for us is
Speaker 1: we don't know how long this is going to go
Speaker 1: for There are white concerns that the pain amongst small
Speaker 1: businesses could create permanent damage to the economy even once
Speaker 1: the pandemic passes. Brad Close at the n f I basis.
Speaker 1: It could also scar communities that see downtown neighborhoods forever changed.
Speaker 1: It is something that's very important. It's in all of
Speaker 1: our communities. When you look at the businesses out there
Speaker 1: that are supporting local communities, sponsoring the Little League, the
Speaker 1: high school marching band, doing the charity drives, it's all
Speaker 1: local small businesses and that who is that's who is
Speaker 1: bearing the kind of the brunt of this. These economic
Speaker 1: shutdowns in the COVID pandemic right now at the business level,
Speaker 1: so they definitely need help. We want to see more open,
Speaker 1: but we want to see them stay open first and
Speaker 1: foremost small businesses need more money to survive, and until
Speaker 1: vaccines are distributed widely, we risk losing more of the
Speaker 1: mom and pop firms that form the backbone of the economy.
Speaker 1: But until then, business owners are staying resilient, pivoting, adapting
Speaker 1: and reimagining using every level they have to stay aflow.
Speaker 1: This is a Bloomberg Radio special report looking at the
Speaker 1: pandemics outsized impact on small business. If you joined us late,
Speaker 1: catch the full show online as a podcast available on
Speaker 1: the Bloomberg Surveillance and Bloomberg Business Week feeds, on Spotify, Stitcher, Apple,
Speaker 1: or wherever else you get your podcasts. I'm Bask, I'm
Speaker 1: John Tucker, and this is Beienberg.