Small businesses are hit hardest as schools shutter and cities ban gatherings

Just weeks ago, Alicia Villanueva was hitting her stride, producing thousands of tamales a week that were sold at Golden State Warriors’ games in San Francisco or serviced for lunches at major tech companies and schools in the Bay Area.

The Mazatlán, Mexico native moved to the U.S. in 2001 and has spent years growing her business Alicia Tamales Los Maya. She employs 24 people and is about to sign a contract with Whole Foods.

The coronavirus pandemic has put all of that into jeopardy. Over the past two weeks, companies have closed offices, sending employees home to work remotely. Schools are following suit. The latest development—a ban on large gatherings in San Francisco and the suspension of the rest of the NBA season—was the final blow. Villanueva has had to cut her employees’ hours from eight to five a day, trying to find any revenue stream and means to keep them on board.

“We never expected this. Everybody is in shock,” she said. “Right now, I’m just working and thinking how we’re going to survive.”

Villanueva estimates she has enough savings to stay open for one month, maybe two if she’s lucky.

Earlier this week she called her lender the Opportunity Fund to see if she could get an extension on a payment coming due. She’s far from alone. The nonprofit, which issues loans and grants to small businesses, has seen an “exponential increase” in the number of business owners applying for loans, said CEO Luz Urrutia.

As the country shuts down to halt the spread of the virus, business owners in every state face similar dilemmas. Before the outbreak, firms were searching for talent in what was the tightest labor market in decades. The Dow Jones hit a record high of 29,535.62. In short, the economy was booming.

Now owners across industries are looking for relief as sales diminish, foot traffic comes to a standstill and supply chains continue to falter in response to the global pandemic.

More than half of small businesses expect to be impacted if the outbreak spreads to their area in the next three months, according to a survey from the National Federation of Independent Business. Already firms are reporting 42 percent slower sales and 39 percent of respondents say they are experiencing disruptions in their supply chain.

In an address to the nation on March 11, President Trump outlined new policies to curtail the outbreak and fiscal measures to help support small businesses, including a new set of loans from the Small Business Administration. Today, he declared a national emergency, making $50 billion in federal funds available.

The SBA announced it is working directly with state governments to provide up to $2 million in low-interest disaster recovery loans to businesses and private nonprofit organizations that are experiencing a “temporary loss of revenue.” The loans can be used for payroll, accounts payable and other bills that owners are unable to pay because of the coronavirus outbreak. For small businesses that don’t have other credit available, the interest rate is 3.75%.

State and local governments are also stepping in to provide relief. San Francisco has delayed the collection of licensing bills and business taxes. Firms with up to $10 million in gross receipts can defer payment of their first-quarter taxes until February 2021 without interest, fees or fines. The city has also established a $1 million fund to give $10,000 grants to up to 100 businesses. 

Seattle, the initial epicenter of the U.S. outbreak, is also waiving late fees and interest for businesses that pay their taxes late because of the outbreak. Amazon, one of the city’s largest employers, has set up a $5 million fund, issuing grants to coffee shops, restaurants and food trucks operating around its headquarters that have been negatively impacted.

Companies will increasingly be looking for ways to cut spending and lower costs, particularly as they look for ways to maintain staffing levels and keep people employed.

“Reining in projected customer acquisition spending is important. It doesn’t matter how much marketing they do,” Urrutia said. “They’re not going to be successful getting new customers because people just aren’t going to be buying.”