While the virus itself may not discriminate based on race or class, the brunt of COVID-19’s economic harm seems to be homing in on some of the most vulnerable businesses and their workers — small businesses, particularly bars and restaurants, which are now being asked to close down at least temporarily to customers. Many restaurant owners aren’t sure if they will be able to reopen after two or more weeks.
Some of the hardest hit? Establishments that normally rely on sporting events to draw customers before, during or after games. The NBA, MLB and NHL have all suspended or postponed their seasons. College basketball, which normally has sports bars rolling in “March Madness” crowds, has also shut down its end-of-season conference tournaments and national tournaments for women’s and men’s basketball.
In the South Bronx, the poorest congressional district in the country as of the last census, the New York Daily News reports bars and other merchants around Yankee Stadium are reeling in the face of a delayed start to a season that usually brings thousands of paying customers buying drinks or Yankees merchandise on multiple nights a week.
On Sunday alone, in efforts to discourage public gathering and limit possible transmission of COVID-19, New York City, Los Angeles, California, Washington State, Illinois, Pennsylvania, Ohio and Massachusetts all ordered bars and/or restaurants to close. Kentucky joined them on Monday, and many more are sure to follow. Restaurants are allowed to keep their kitchens open for take-out or delivery service, but that still leaves wait staff out of a job for now. Catering, which might have offered some fallback income to some of those servers and bartenders, is also suffering under temporary prohibitions against large gatherings.
“This is not a decision I make lightly,” New York City Mayor Bill De Blasio said in a statement announcing his executive order to close bars and restaurants in the country’s densest city. “These places are part of the heart and soul of our city. They are part of what it means to be a New Yorker. But our city is facing an unprecedented threat, and we must respond with a wartime mentality.”
Local governments are only just starting to grapple with the virus’s impact on small businesses.
New York City’s Department of Small Business Services is offering employee retention grants to businesses of less than five employees, covering 40 percent of payroll costs for up to two months. The department is also offering zero-interest loans up to $75,000 to businesses of up to 99 employees across all locations, to help mitigate losses. For these grants or loans, businesses must be able to show they’ve experienced at least a 25 percent decrease in revenue due to the COVID-19 outbreak.
On the west coast, Sacramento City Council passed an economic relief package including $1 million for small local businesses, including restaurants, retail and day care providers. Those dollars “could include zero-interest loans of up to $25,000 based on need,” and loans may be available as early as Wednesday, according to The Sacramento Bee. In Los Angeles, while the city did not as of Monday morning unveil a more formal plan to help small businesses and workers grapple with loses related to COVID-19, Mayor Eric Garcetti did tell the Los Angeles Times he has asked City Attorney Mike Feuer to look into the legality of preventing commercial evictions.
Seattle’s and San Francisco’s plans are more comprehensive so far. On March 10, Seattle Mayor Jenny A. Durkan announced an executive order to defer business & occupation tax collection, provide deferment for utility payments, expand the city’s existing Small Business Stabilization Fund, and create a small business recovery task force. On March 11, San Francisco Mayor London Breed announced a similar plan of deferring business tax collection, deferring business license fees, and putting $1 million into a new fund to provide small business relief grants up to $10,000.
Seattle, San Francisco and other cities are also offering technical assistance to help small business owners apply for emergency loans from the U.S. Small Business Administration. The Coronavirus Preparedness and Response Supplemental Appropriations Act, passed by Congress and signed into law on March 6 by President Donald Trump, authorizes the agency to provide up to $7 billion in “Economic Injury Disaster Loans,” up to $2 million each, with an interest rate of 3.75 percent for small businesses. Nonprofit organizations are also eligible to apply for the loans, and would pay an interest rate of only 2.75 percent. The loans can be used to pay for debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
Worker cooperatives are eligible as well for the SBA’s Economic Injury Disaster Loans, according to Kate LaTour, director of government relations at NCBA-CLUSA, a national trade group for cooperative businesses. According to LaTour, unlike the SBA’s main 7(a) and 504 loan programs, the agency’s disaster loans do not require a personal guarantee.
“By and large, the SBA doesn’t have a lot of exposure to cooperative businesses since co-ops are not eligible for the largest SBA programs,” LaTour said on a March 13 webinar. “We encourage you to apply as a cooperative business. If you have trouble applying based on being a cooperative, please contact your member of congress and also let me know.”
That said, according to Brendan Greeley, economics editor for the Financial Times, the SBA’s Economic Injury Disaster Loans take three weeks to approve, and require businesses to prove they have no other funding.
In the meantime, meal delivery platform Grubhub announced it is suspending collection of up to $100 million in commissions to help its 350,000-plus listed restaurants manage cashflow. The company also said it is creating the Grubhub Community Relief Fund, funded out of customers rounding up purchases to the nearest dollar and donating the change. Grubhub said it will work with local city officials to identify the organizations that can utilize the funds and to consider other support programs during the pandemic.
Some of the smallest businesses of all — artists and performers and other parts of the “gig economy” have turned to the internet to reach out to fans and supporters who might otherwise be coming to see them at concerts or shows or exhibition openings that have recently been postponed or cancelled. They’re using Google Docs or Twitter to put their Venmo or PayPal payment information out there to accept “tips” they might have otherwise gotten at shows. It’s not just college basketball that is losing out on its biggest fan outing time of year — the new season of RuPaul’s Drag Race just got started, meaning many bars are now cancelling typically crowded weekly watch parties hosted by drag artists who depend on tips.
Public health experts recommend that avoiding crowded spaces such as bars or restaurants, or “social distancing,” is key to “flattening the curve,” referring to reducing transmissions in the earlier phases of an outbreak. The idea is to limit the number of concurrent patients who need hospitalization,and hopefully keep the healthcare system from being overwhelmed with more infected cases than it can treat at any one time. That’s the thinking behind the orders to close bars and restaurants temporarily, as painful as it will make things for workers and business owners in the near term or beyond
“If it looks like you’re overreacting, you’re probably doing the right thing,” said National Institute of Allergy and Infectious Diseases Director Anthony Fauci to CNN on Sunday.
This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi Community Development.
Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.