Emergency small business loans are just the start

As jobless claims skyrocket, attention has focused on helping workers. It is appropriate. But ensuring that businesses survive the coronavirus disruption will also protect workers.

Last week, Governor Charlie Baker threw a lifeline to the restaurant and hotel sectors by announcing its intention to postpone the collection of sales, meal and room occupancy taxes which would be due in March, April and May until June 20. In addition, all penalties and interest will be waived. This relief applies to businesses that paid less than $ 150,000 in regular sales plus tax on meals and to businesses that paid less than $ 150,000 in room occupancy charges.

Baker also announced a $ 10 million loan fund provide emergency capital of up to $ 75,000 to Massachusetts businesses that employ less than 50 full-time and part-time employees. Three days after its launch, the emergency fund was so overwhelmed, he stopped taking apps. The Baker administration announced on Friday that officials will meet this week to vote on making the additional $ 10 million available. But the state loan fund is not reopening to other applicants. According to a spokeswoman for the governor, they will need to enroll in a federal emergency loan program available through the Small Business Administration.

The $ 2 trillion federal stimulus package debated on Capitol Hill this week could offer some small businesses the option of “break-in” federal loans, in addition to the modest SBA disaster loan fund that Congress authorized in early March.

And, with thousands of layoffs now occurring daily, the governor has also signed emergency legislation to waive the usual one-week waiting period between filing a claim and receiving a payment. .

Restaurants United, a group of independent restaurant owners and operators, is seeking, among other things, reductions in commercial and residential rents; a moratorium on commercial and residential evictions; and immediate and accelerated legislation providing compensation for restaurant workers, regardless of their citizenship status.

But relief should not be distributed sector by sector on the basis of the loudest and most organized lobbying efforts. The coronavirus can attack anyone, in any sector of work or small business operation – from those who work in small retail and personal services businesses on Main Street to those who repair roofs or install kitchen counters. Most small businesses survive on the thinnest cash margins. According to a Small Business Survey 2016 conducted by the JP Morgan Chase & Co. Institute, companies with fewer than 500 employees have a cash reserve of approximately 27 days. But the most typical small business, which is much smaller than 500, can’t cover more than a week or two.

These small business owners do not need more debt from loans. To survive, they need more cash on hand, Hurst said.

With premium payments due in April, the state can issue new guidelines for maintaining health insurance. It can make workers’ compensation coverage during the crisis reflect actual payroll on a monthly basis – not based on payroll as of the January 1 renewal date.

Baker can use the power of his office to pressure homeowners, commercial real estate insurers, banks, and municipalities to adjust rents, premiums, mortgage payments, and commercial property taxes to reflect sales and current economic realities.

To save small businesses in Massachusetts, the Baker administration will have to think big. And we must act quickly, because these companies have bills to pay.

Correction: An earlier version of this editorial misspelled the name of Jon Hurst, president of the Retailers Association of Massachusetts.

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