The COVID-19 pandemic has forced millions of small businesses throughout the country to shutter — either by local or state government order, or on their own accord to help stop the spread of the deadly virus. Saving these small businesses from permanently closing, and helping the tens of millions of workers they employ, will require a federal response many times greater than any government disaster relief program in our lifetime — and likely as large, if not larger, than the massive New Deal programs in the wake of the Great Depression.
So far, the federal government has allocated more than $350 billion in emergency lending power to the Small Business Administration — far less than what will be needed to save Main Street shops and offices, and potentially coming far too late to stave off the worst losses to come from this crisis. Congress must continue to act quickly and at scale, and cities and states must continue to fill the void to help support businesses and workers until the federal response is able to meet the scope of the COVID-19 crisis.
In some places, these actions are already happening. Here are the steps local and state governments have taken so far to shelter small businesses from the virus’s vast economic turmoil.
Grants and Loans
Small business owners’ most crucial and immediate need is cash — financial relief to keep afloat as the most disastrous economic effects of the crisis take hold. Many state and local governments have already jumped in to help, both to provide immediate assistance and to tide over small businesses until federal relief is actually available.
The most important programs are those that provide outright grants to replace at least some of the income that small businesses are losing and to help them cover the costs of payroll, rent, utilities, and other critical expenses.
Demand for these programs has been extremely high, which speaks to a dire need for additional and ongoing funding support. For example, The City of Lakewood, Ohio launched a Small Business Rent Relief Fund on March 23, making grants of up to $3,000 to reimburse small businesses’ rent payments. The fund is capitalized by the City’s Economic Development Fund and federal Community Development Block Grants. It received a high volume of applications and was closed on March 27. The City of Hillsboro, Oregon has made two rounds of funding, at $500,000 each, available through its Small Business Emergency Relief Program. The program gave priority to businesses that serve large groups of people, such as bars and restaurants. Both of the two funding rounds were depleted the day applications were available.
Iowa quickly created two small business grant programs. The Iowa Small Business Relief Fund offers grants of between $5,000-$25,000, plus sales and use tax deferrals (this fund is already depleted). The Iowa Targeted Small Business Sole Operator Fund makes grants up to $10,000 to businesses that are single owners with no employees and that are TSB-certified by the state.
Small business relief programs that provide zero-interest loans, with repayment deferred for six months or more, are also in high demand. For instance, Little Falls, Minnesota’s Economic Development Authority is offering loans of up to $5,000 for 24 months, with payments deferred for the first six months and zero-percent interest for the final 18 months. Through its Office of Economic Development, Utah is offering zero-interest bridge loans of $5,000-$20,000 to businesses with under 50 employees. Loan repayment is deferred for one year. At least one-quarter of the program’s funds are reserved for businesses in rural communities. The bridge loans are being offered in two rounds — one for for-profit businesses and one for nonprofit 501(c)3 organizations. Loans like these serve as a stopgap for small businesses until federal relief is available.
Tax Deferral
The IRS is allowing deferral on income tax payments until July 15, which will help small business owners. Cities and states are also letting businesses defer on tax payments. San Francisco is allowing businesses to defer payment of first quarter 2020 business taxes until February 2021 and delaying its collection of business license and permit fees. Seattle has allowed businesses with $5 million or less of taxable income to defer payment of city business license taxes. Connecticut, Iowa and Maryland have granted deferral of payment or filing deadline extensions for business-related taxes as well. Ongoing, updated information on changes in state tax rules can be found on the American Institute of CPA’s website.
Eviction and Foreclosure Moratorium
At least five states and a number of cities have taken steps to prevent small businesses from facing eviction as the effects of the crisis take hold. Seattle’s mayor has halted evictions of small businesses and prohibited late rent payment fees for two months, while asking for landlords to negotiate payment plans with commercial tenants in need. Five states, Kansas, Iowa, Pennsylvania, Rhode Island, and New York, have limited or suspended commercial evictions and foreclosures. New York’s court system halted all eviction cases indefinitely after considerable pressure from housing justice advocates; in Kansas, Governor Laura Kelly issued an executive order ordering banks to halt foreclosures and courts to stop all commercial and residential evictions until at least May. California meanwhile left the decision to halt evictions up to cities. Thus far San Francisco, Los Angeles, Rancho Cucamonga, Marin County, and four cities in Ventura County have done so.
Utility Shut Off Moratorium
Similarly, cities around the country have also ordered utility companies to keep lights on and water running as small businesses weather the COVID-19 crisis. San Francisco suspended power and water shutoffs for its commercial tenants, and waived all penalties and interest for late payments. In Seattle, the city pledged to keep lights and water on for all residents and commercial tenants during the crisis, and allowed residents who lost jobs and wages during the crisis to set up deferred payment plans for their utilities. The response elsewhere has been similar, as local governments and utility companies have pledged to keep services on for customers through the crisis. Utilities in South Carolina, Kentucky, Massachusetts, and elsewhere have temporarily stopped disconnections or shut-offs for small businesses during the crisis. State and local officials can and should stop shutoffs for public utilities and compel private utility companies to do the same. On the federal level, House and Senate members have pushed for a national moratorium on water shut-offs, an especially important ask as hand-washing is a first line of defense against the Coronavirus.
Throughout the crisis, we’ll continue to track what cities and states are doing to help small businesses and workers weather the crisis. Stay tuned. And if you have tips and news to share from your community, please let us know at rknox@ilsr.org.
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