After almost four months of dealing with the CIVID19 pandemic, America has barely been able to get off the mat. Even with some states trying to open up their economies, the nation is just not seeing a significant increase in business. It is no small thing that political and racial unrest is tearing at the fabric of American culture on top of the ravages of the virus.

Restaurant owner packing food to go
photo credit: Norma Mortenson / Pexels

While there have been some big corporate industries that have been hit hard by the pandemic, it’s the small business owners that figure to struggle the most. They have put their hearts in souls into building what they thought would be a decent future for them and their families. Now, their futures are at risk.

To better understand the current plight of the small business owner, it makes sense to take a look at how said small businesses have been affected by COVID19.

Loss of Capital Reserves

Most small businesses are run from “paycheck to paycheck.” At any given time, all they have that stands between them and insolvency is the income they can bring in today and the meager capital reserves they have set aside for emergencies.

Well, the emergency has come. For most small businesses, the capital reserves have been depleted and the meager revenues coming through the door are not enough to sustain the business. This will undoubtedly result in many businesses never seeing the light of day again. Some estimates put that number at about 40% of the small businesses that were operating before the virus outbreak.

Lining Up for Bankruptcy Protection

Of the business owners who are willing to give it another go, there are significant issues with which they must deal. One of those issues is dealing with debt problems that figure to anchor a business’ ability to get moving again.

It’s a good bet a large number of small business owners will be counting on the bankruptcy courts to give them the protection they need from creditors that are also struggling. This is one point in the country’s financial history that no one is going to question a small business owner who feels the need to file for bankruptcy protection.

Relaxed employee meeting

Loss of Employees

To keep the economy from completely collapsing, the U.S. Congress passed a $2.2 trillion stimulus package. As part of the package, $350 billion was set aside for small businesses in an attempt to motivate them to keep their employees employed. Even after Congress allocated another $250 billion to the program, it’s not clear it made much of an impact.

The reason why is curious. In the same stimulus package, Congress beefed-up unemployment benefits across the country. With unemployed workers allowed to secure unemployment payments as high as $600 a month higher than the wages they were earning, there is little incentive for some workers to go back to work.

That leaves some opening businesses short of staff and left to dig into depleted pockets for hiring and training costs. For some businesses faced with this dilemma, it seems very likely they may have to suspend business for longer than necessary.

For now, it’s impossible to predict the future. Nothing will be clear until the nation’s economies get back to some level of normalcy.