Famed hockey player Wayne Gretzky said he was taught to “skate to where the puck will be, not where it has been.” In rural Minnesota, anyone who has ever hunted or shot at clay targets knows the principal of leading the target.
In business, it’s the same. You constantly look to where the market and your customers are going, while maintaining your core services and products.
For local governments, economic development is capitalizing on the opportunities your community provides entrepreneurs by anticipating their needs and being poised to provide them when opportunity strikes.
A core economic development fact is that we do best when we promote and support those businesses in our community that are the mainstay of main street and our employment base in business and manufacturing. Never has a commitment to that principal been more necessary than today.
Main street small town America has, for the most part, been devastated by the coronavirus. The mass shutdown of small businesses and the resulting job losses has business owners and employees suffering alike. There are businesses that are still open, still employing local people, but suffering greatly under the necessary forced closures of other businesses. The owners are going through the excruciating process of laying off employees, cutting employee hours, and working longer hours themselves.
There are businesses in our communities that continue to see a regular flow of customers. They may be getting on just fine though they have to be deeply concerned about the health and safety of their employees, as well as the family members who dedicate themselves to keeping the business running. For some of these businesses, there will be a belt tightening if our communities remain shut down for an extended time as the spendable cash people have continues to dwindle. Home budgets will get tighter.
Owners of small businesses have been scrambling to get in their Small Business Administration (SBA) Paycheck Protection Program and Emergency Loan Program applications. If they qualify, some have gotten applications into the state’s Small Business Emergency Loan Program. It set aside $30 million for loans of between $2,500 and $35,000. The loans will be 50 percent forgivable and offered at a 0 percent interest rate. Qualifying businesses are those that were deemed non-essential and shut down by Gov. Tim Walz’s order to implement more strict social distancing efforts.
We are waiting to see what more the Minnesota Legislature will do for small businesses when it gets back to work April 14.
Much more will be needed if the social distancing and business shutdowns continue into the summer months or return in the fall.
For the most part, local and regional assistance has come in the form of establishing websites that point businesses to state and federal programs. These efforts are necessary and helpful, yet they are not nearly enough.
Some counties and cities are offering to forgo payments on their outstanding economic development loans and not charging interest on the balance. Some have helped with community fundraising projects.
There will have to be more local help than just pointing businesses to sources of federal or state help. Counties and cities are going to have to do what they can to ensure that main street not just survives this pandemic crisis, but comes out the other side ready to rebound without falling flat because of the weight of debt. More debt to pay off erodes a business’ cash flow beyond what is sustainable. If the business decides it’s not worth it, that the stress is too much and the return too little, it will simply walk away leaving lenders with a mounting portfolio of bad loans.
Much of the help that has been offered at the federal and state levels gets small businesses by for a couple months but by then, we had better see a return to more normal business conditions or the state and federal governments will have to come through with additional help.
Why is this so essential?
“The stimulus provides no remedy for the most critical need of small business owners—unrestricted, direct grant assistance,” Small Business Majority Founder and CEO, John Arensmeyer says.
“Although a portion of these loans may be forgiven if a business is able to maintain payroll, fronting salaries is simply not possible for many small businesses who have seen demand for their products and services drop to zero overnight,” he said. “Moreover, while loans may benefit some small businesses in the long run, asking business owners to assume more debt is not the solution. This bill will leave a gaping hole in the pockets of small business owners.”
Many business owners know that what they are losing today can’t be recovered. It is lost for good and will leave them short on revenue even when our economy starts up again. That lost revenue makes businesses wary of taking on more debt.
“Why is it important to save America’s main streets? Because in times of crisis, we look to our communities to weather the storm. We lift up our neighbors who have lost their jobs, and lean on each other to keep ourselves mentally and emotionally upright. And the assistance we provide now will determine what our main streets look like when this storm passes,” Nicholas Som writes for the National Trust.
He goes on to quote Matthew Wagner, vice president of revitalization programs at Main Street America: “Small businesses fuel our communities, downtowns, and neighborhood business districts with jobs, products, and services, and as important places for social engagement. Seemingly small steps can make a big impact and help businesses continue to be a part of our communities in the months and years to come.”
Local governments will have to use a combination of innovative strategies and basic financial assistance to keep main street healthy. Entrepreneurs don’t want handouts. They want a hand extended to get them through difficult times so that they can come back and again be a vital part of a thriving community.
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- Small town businesses need help to survive COVID-19 - April 15, 2020