The Washington PostDemocracy Dies in Darkness

Opinion The coronavirus crisis exposes how America really feels about small businesses

A woman walks past a closed children's clothing store in Chicago on Wednesday. (Charles Rex Arbogast/AP)

This article has been updated.

Carol Barash, the founder of communications consultancy Story2, is waiting for money from the Paycheck Protection Program. She has been approved for the program — after the third bank she approached helped her process an application. But she hasn’t received the money. Her staff is waiting. “I can’t pay my people this week unless the government pays me.”

In the United States, we like to boast of our devotion to small business. “Small businesses are at the heart of our nation,” President Trump said in a proclamation celebrating Small Business Week in 2018. In 2019? “America’s 30 million small businesses are central to our economy and our communities.”

The coronavirus crisis reveals just how cheap these sentiments are.

Full coverage of the coronavirus pandemic

America’s small businesses — which employ about half the working population — are currently under all but existential threat, thanks to the covid-19 pandemic. The Brookings Institution believes that more than half are in serious danger of closing for good as a result of the crisis. Main Street America, which weighted its survey toward businesses with fewer than 20 employees, discovered more than a third in danger of shutting their doors for good within two months, short of receiving substantial help.

In a number of European countries, businesses received payroll supports — meaning the government essentially took over a percentage of their payrolls, freezing the economy in place so they could re-open their doors when the danger has passed. This sort of plan could be a game changer for small businesses here, and both Democratic Rep. Pramila Jayapal (Wash.) and Republican Sen. Josh Hawley (Mo.) have proposed such legislation.

But this is the United States. We don’t do things like that here. Instead, Congress remains mired in a partisan fight over adding another $250 billion to the Paycheck Protection Program, which ran out of funds in just two weeks. That’s right. Small businesses — which employ about half of all Americans — have been receiving help on a first-come, first-serve basis. In other words, you may have lost out because you didn’t hand in your paperwork fast enough or, even worse, your financial institution didn’t get to it in time.

Carlos Covarrubias had to close his practice when the coronavirus pandemic hit, but emotional and spiritual support remain a lifeline to anxious patients. (Video: Shane Alcock/The Washington Post)

And small business owners who have applied for help through the Paycheck Protection Program — which requires they keep 75 percent of their staff employed for at least eight weeks — are mired in confusion and bureaucracy. The Small Business Administration’s website repeatedly crashed. Many banks turned out to be less than helpful, refusing to process applications from those who hadn’t banked or borrowed money from them in the past. Wells Fargo used the emergency to get around the limit on assets imposed after the bank’s myriad scandals.

Both banks and entrepreneurs alike say the anti-fraud provisions in the plan leave them frightened about their liability. What happens if a business already laid off someone because it lacked funds and the person won’t come back? Do contractors count as employees? That’s an issue for Kristi Faulkner, who is one of two partners at Womenkind, a New York-based strategic marketing company. She told me she hasn’t applied for aid yet because her accountant has one opinion on that and her lawyer another. Meanwhile, the company’s revenues have plunged to almost nothing.

One other thing: Thanks to the way the legislation was written, a number of, er, bigger businesses can compete for the pot of money. A hotel or restaurant franchise owner with fewer than 500 employees per location? You’ve got a chance at this money, too! A hedge fund? Many are suffering, not because of social distancing and mandatory closing, but because of bad financial bets. Well, the rules are vague and a number are trying their luck.

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At the same time, the Cares Act lavished so much largesse on the nation’s largest businesses that none other than Sen. Elizabeth Warren (D-Mass.) called the pot of available funds a “slush fund.” The Congressional Oversight Commission so far consists of one staffer who, as Bloomberg reports, has “no colleagues, no staff and no office.”

All of this favors those with access to top-dollar advice, while leaving the smallest, less connected businesses quite possibly bereft of needed funds. Think minority firms. Think businesses owned by women. Think 10-person companies vs. those with 200 employees.

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This is the thing about rising inequality. It’s almost inexorable. The Trump-era tax reforms, sold, in part, as a boon to small business and mom-and-pop taxpayers, favored the wealthy at the expense of everyone else. The legislative response to the covid-19 pandemic repeats the pattern, showering favor on big business, while forcing small business to fight over crumbs. One likely result? Small retailers and entertainment venues close their doors for good. Another? Increased corporate consolidation, as big players swoop in to buy financially desperate competitors. Once again, small business is honored more in the breech than in the observance.

Carol Barash founded Story2 because she is a professional storyteller. She can spot a villain. It starts at the top, she tells me. Trump doesn’t care about small business owners, and neither does Treasury Secretary Steven Mnuchin. “They are about turning money into more money for people who already have money,” she says. “They don’t care about small business owners any more than they care about any small person, anywhere.”

Read more:

Richard Cordray: Three reasons consumers can’t bring the economy back from covid-19

Cathy Merrill: This is more than a ‘hiatus’ for my small business

Dana Milbank: Trump and Kushner could reap a pandemic windfall

Josh Hawley: Congress should protect every job in the country during this crisis

Henry Paulson: 7 principles for a post-coronavirus economy

Coronavirus: What you need to know

The latest: The CDC has loosened many of its recommendations for battling the coronavirus, a strategic shift that puts more of the onus on individuals, rather than on schools, businesses and other institutions, to limit viral spread.

Variants: BA.5 is the most recent omicron subvariant, and it’s quickly become the dominant strain in the U.S. Here’s what to know about it, and why vaccines may only offer limited protection.

Vaccines: For people under 50, second booster doses are on hold while the Biden administration works to roll out shots specifically targeting the omicron subvariants this fall. Immunizations for children under 5 became available this summer. Here’s what to know about how vaccine efficacy could be affected by your prior infections and booster history.

Guidance: CDC guidelines have been confusing — if you get covid, here’s how to tell when you’re no longer contagious. We’ve also created a guide to help you decide when to keep wearing face coverings.

Where do things stand? See the latest coronavirus numbers in the U.S. and across the world. The omicron variant is behind much of the recent spread.

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