“I have built a buffer into the business,” Kory told me. “We can handle keeping people employed for a bit. But if we’re not able to get back into production once we have really critical work to do—once the summer harvest comes in mid-May or early May—that would be a challenge that will not be very easy to overcome.” She said the company would face an existential crisis within a few weeks.
INNA jam is actually better off than most small businesses: A recent study by the JPMorgan Chase Institute found that only half of them have enough resources on hand to cover a month of normal outflows, including costs like rent, utilities, and payroll. A quarter have the resources to cover just two weeks. Every day that passes, the country’s small businesses edge closer to insolvency, putting tens of millions of jobs at risk. Absent drastic and immediate government action, an untold number of otherwise viable businesses will fail: restaurants, bars, yoga studios, consultancies, salons, toy makers, artificial-intelligence start-ups, clothiers, design firms, bookshops, and yes, the producers of chutneys and pickles and jams.
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That would worsen the recession that is already gripping the country, perpetuating and strengthening it, as laid-off workers cut back on spending and belly-up companies stop ordering goods from and supplying goods to other firms. It would also be a tragedy. Many of the country’s best-loved businesses, the ones that give neighborhoods character, would come to an unnecessary end. Many of the country’s most important companies, the ones that disrupt incumbents and generate growth, would die too.
The government, having never faced a pandemic recession like this one, at least not in the modern era, has few if any ready tools to address the crisis. The Small Business Administration has pushed its disaster-loan program, offering up to $2 million at a 3.75 percent interest rate, but many companies do not qualify. Hundreds of thousands of them might collapse before any SBA help arrives. Nor does the SBA have the staffing or the resources to aid all the businesses that might need loans.
Now members of Congress and the Trump administration are working to figure out a way to bail out the little guy, as they rush to bail out a lot of big guys too. Senate Republicans and the Treasury have worked out an “interruption-loan program” worth up to $350 billion. The program would provide loans of up to $10 million to companies that retain employees on their books. The loans would be forgiven if the businesses decline to fire workers or hire back the ones they have already let go. “Small businesses fail all the time, and in recessions they fail more often,” says Glenn Hubbard, a former economic official in the George W. Bush administration, who helped Republican members of Congress draft the plan under debate. “That’s not a particular policy concern, other than when you have demand problems during a recession. But here it’s not a demand shock. It’s because we’re telling them to shut down. There’s no moral hazard. So we have to try to keep the economy as normal as we can for when things start back up.”