Report finds majority of small businesses need government assistance to remain open

Before the pandemic hit, 2020 was on track to be a record revenue year at Jamaican Patty Co., says owner Du’Sean Howard. The 3-year-old eatery, which specializes in meat and veggie-packed buttery pastries, ended the year down roughly $15,000 to $20,000 in expected revenue.

“We had so many events that got canceled with the food truck. We were on serious momentum,” Howard said of the mobile eatery, which launched in 2019.

Some shifts early on like utilizing Uber Eats and Grubhub delivery services helped save business during stay-at-home orders, he said. And bringing on family for labor helped save costs. Howard said he didn’t apply for Paycheck Protection Program funding, but he did receive an Economic Injury Disaster Loan.

“We found creative ways to generate income. It’s a family business, so we were able to help each other out,” he said. “We took a hit just like everybody else. I don’t think we were hurt as bad as some of our other community restaurants that rely on heavy staffing.”

While Howard said he’s hopeful the business will make it through the pandemic, other restaurants suffered devastating blows.

Tequila & Mezcal Mexican Cuisine and Bar co-owner Sofia Pavon-Wilson said she closed the restaurant in July 2020. In February last year, she opened the recently rebranded family business with eight employees.

“I wasn’t going to have my family be drowning in thousands of dollars [of debt] just to maintain something that wasn’t even getting any business,” Pavon-Wilson said. “If we would have been able to have people inside, we would have done great.”

She said the business didn’t secure a PPP loan, but did receive a loan equivalent to one month’s rent from the U.S. Small Business Administration.

“Because I am so young and I don’t have a huge credit history, that was also a big issue,” she said of accessing capital. “It wasn’t meant to be, and we’ve come to terms with it.”

Small-business outlook
Even with vaccine delivery underway, the U.S. Chamber of Commerce in December reported most small-business owners nationwide believe the worst of the pandemic is ahead and half of businesses see operations continuing in the current economic climate. Three-quarters of small-business owners indicate a need for further government assistance to remain open, according to the U.S. chamber, a figure which increases to 83% among minority-owned businesses. Minority businesses are defined federally as companies that are more than 50% owned by Black, Hispanic, Asian, Native American or female entrepreneurs.

The latest federal stimulus bill, which began its rollout last month, in part targets support to minority-owned businesses and the smallest of small businesses. The latest round of PPP funding through the SBA sets aside at least $25 billion for borrowers with a maximum of 10 employees or for those in low- or moderate-income neighborhoods. The Coronavirus Aid, Relief and Economic Security Act released last spring did not reach minority communities effectively, according to some economic reports. One report from the Federal Reserve of New York found PPP loans reached only 20% of eligible firms in states with the highest densities of Black-owned firms, and in counties with the densest Black-owned business activity, its coverage rates were typically lower than 20%.

Missouri State University economist David Mitchell said reports find most minority-owned businesses are in the service sectors, which have been hit especially hard by the pandemic. He said minority business owners also tend to have less wealth and capital, which impacts their ability to make it through these mandated shutdowns.

“The big businesses will be OK. It’s going to be the small businesses that get hurt the most,” Mitchell said. “The more people get into the habit of not going to a restaurant (and) the more they get into the habit of getting all their stuff from Amazon, the less likely they will go back to mom-and-pop retail and Joe’s restaurant. You want this thing over as quickly as possible.”

The U.S. chamber study finds just a quarter of small-business owners think the economic climate will return to “normal” in under six months, and 56% predict it may take up to a year.

Making it through
Day Curtiss, who owns Dayora Salon inside Sola Salon Studios, said she applied as quick as she could for a PPP loan last spring but missed the first round of funding. She later received the grant once more funds were added. More help came in unemployment benefits during the six-week stay-at-home order and when the owners of Sola Salon Studios waived rent payments.

“That was huge and was a big relief,” she said, adding her business model also helped keep the salon open. “I happen to be very fortunate and very lucky, because I’m in a private-suite studio. When the pandemic happened, people were uncomfortable going to bigger salons. I’m thankful people supported my Black-owned small business.”

She estimates business was down 22% in 2020 compared with 2019. She’s still considering funding through the latest round of PPP.

Curtiss said as a sole proprietor, navigating the rules and paperwork for government assistance was a challenge, and she wished there were more resources available for small businesses.

“When you’re a single chair salon, you are your marketing, your sales, your ordering,” she said. “There’s no one source, and it seems like there is nothing approachable.”

Mitchell echoed that challenge of small businesses and added he supports the government working to target the smallest of small businesses with the latest funding.

“It really needs to be targeted toward restaurants who saw their hours significantly cut. Or the barber, they can only have one customer at a time,” he said.

“If these businesses close, they will eventually come back, but it will be five or six years later. … It’s going to be a whole lot harder to bring them back. I’m breaking my norms and saying they need to do more of getting help to businesses.”

Bombay Bazaar co-owner Nirav Patel also received PPP funds and said they were needed to keep the business open. The small grocer specializing in Asian goods said he remained open as an essential business but temporarily cut hours to save on staffing costs and build in time for cleaning the shop, which opened in November 2019.

“A lot of people are hesitant to go out just because they want to stay safe,” he said. “If they do come in, they would do their shopping fairly quickly.”

He said while his customer base remained somewhat steady, wholesale accounts with area restaurants did take a dip of roughly 25%-40%. And supply chain issues made it a challenge to maintain inventory.

“I get a lot of my groceries from India, so once India went into lockdown, I had a lot of people coming in because they wanted to get stocked up on lentils, rice and flour,” he said. “That has affected me more than anything else because we’re not getting many things from India now.”

The pandemic did put Patel’s plan to open a snack shop inside the grocer on hold, but he said being an essential business helped the new grocer remain open.

“Everyone needs groceries,” he said.