The New Cost of Running a Small Business During the Coronavirus Pandemic

Customers+take+advantage+of+indoor+dining+at+Pho+Bang+restaurant+in+Manhattan%2C+as+temperatures+drop+with+winter+approaching.

Jessica Zheng

Customers take advantage of indoor dining at Pho Bang restaurant in Manhattan, as temperatures drop with winter approaching.

The halal cart on the corner. The laundromat down the block. The car shop that you pass on the way home. The deli at which you stop to get your breakfast. More than nine in ten Americans shop at a small business every month. 

A bleak milestone sets in, as the United States surpasses more than 10 million reported cases of COVID-19, amidst growing outbreaks across the country. This comes as the U.S. has set record one-day spikes in cases, up more than 30 percent compared to a week ago. Even here in New York, the statewide positivity rate is at 2.56% surpassing levels seen in March 2020. 

Across the country and Europe, a new outbreak of COVID-19 is emerging quickly, and with a potential vaccine that may not be available until early to mid-2021, a dark reality may soon set in for many: thousands of small businesses could permanently close. 

Yelp’s latest Economic Impact Report, which releases business closures in the U.S due to the economic impact of the Coronavirus pandemic, announced that as of August 31st, 2020, 163,735 businesses have closed. Yelp has also kept track of the number of permanent business closures that have been steadily increasing over the past months, reaching 97,966 or 60% of closed businesses that will not be reopening. 

Many businesses face a daunting question: Should they try to make it through a tough 2020-2021 winter with rising COVID-19 cases, possible new lockdowns, and potentially the most controversial election in U.S. history, or should they just lay off employees and close before they have nothing left?

For John Wong and his family, who have been running Pho Bang Restaurant in Flushing for over twenty years, the decision is a hard one to make, as they may face bankruptcy. “Before COVID-19, the restaurant used to be filled with customers, with people waiting in line for a seat. Nowadays, it is fortunate to see at least three filled tables at once, for indoor dining,” said Wong.

It is becoming clearer that even well-off businesses before the Coronavirus pandemic are being threatened by uncertainty. Many businesses that started closing early in the pandemic were already struggling. 

A report from Facebook & Small Business Roundtable shows that about a third of small businesses had temporarily stopped operating by mid-April 2020. By mid-May, more than half had laid off or furloughed employees. While new businesses will eventually take advantage of the opportunity and replace the old ones, the process will take longer than reopening existing businesses. 

In April 2020, following the national shutdown and the beginning of quarantine, Mr.Wong’s restaurant was initially “stable with the take-out regulations; no profits or losses.” After cases in New York had decreased and businesses reopened for outdoor and indoor dining, Mr. Wong assumed that business would generate profit again. This was not the case, as more employees needed to be rehired again to work the restaurant. Now with cases rising again, “it is difficult to tell how much longer until the store must close,” he says. 

The United States could be on the verge of another wave of small businesses shutting down, if the Federal government fails to provide more financial assistance. For Mr.Wong and the thousands of people who make their living through a small business, the future is a scary challenge filled with unknowns. 

According to the U.S. Small Business Association, small businesses account for 44 percent of U.S. economic activity. The permanent closures of small businesses would have lasting effects, such as longer-lasting unemployment as compared to temporary layoffs. Even as we head towards recovery, studies show that people who lost their jobs earn 17.5% less at their new jobs. Small businesses are often the backbone of the larger industries, and job losses could cause significant losses in the broader economy.

We’re deeply committed to ensuring that small businesses have the support they require,” said President Donald Trump, in response to the reported rise in small business foreclosures. In April 2020, the Federal government launched the Payment Protection Program (PPP), an SBA loan designed to help businesses to keep their workforce employed during the Coronavirus (COVID-19) crisis, and they approved $525 billion in loans for small businesses. However, as of August 8th, 2020, the PPP has closed and no longer accepts applications. Even with PPP and other financial support, there is still no guarantee that these businesses will still survive, given the current trajectory of the pandemic.

There is an even bigger challenge for lower-income workers and minority business owners. New York City and other bigger states with metro areas with higher rents and more binding local operations have felt a greater toll. 

As those friendly faces that we are used to passing by start to disappear, so does the character of our city. New York City is one of the most diverse cities in the world, with minorities owning a majority of small businesses here. However, minorities own 25 percent of small businesses in the most affected sectors, in comparison with 15 percent in the less affected sectors. Since their businesses are in slow-recovering sectors, business owners with only a high-school degree or less are also at a disadvantage. 

In an unprecedented time like this, we are living through a series of new normals. We have all been told and reminded to practice social distancing and to wear masks, but just because we have dealt with the Coronavirus pandemic since March 2020, with life gradually going back to normal, we still need to realize the impact that our actions have on those around us. 

Make sure to remember the many small businesses you once relied on, and even reconsider going to the ones that you previously passed by. Behind each storefront are the people who rely on you to pay for their rent, pay for their food, and help to pay their bills. Use this time of uncertainty to not only explore and to develop your own interests, but to rely on small businesses to help you to supply these interests. 

For John Wong and his family, who have been running Pho Bang Restaurant in Flushing for over twenty years, the decision is a hard one to make, as they may face bankruptcy. “Before COVID-19, the restaurant used to be filled with customers, with people waiting in line for a seat. Nowadays, it is fortunate to see at least three filled tables at once, for indoor dining,” said Wong.

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