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Emergency loans to small businesses are just a start

With coronavirus crippling small businesses, the government should be helping them avoid costs whenever possible.

A sign outside a Boston dessert shop posted to reassure customers. Restaurants are among the many small businesses suffering severe losses amid the coronavirus epidemic.David L. Ryan/Globe Staff

To ease the tremendous economic hurt caused by the coronavirus crisis, the federal government will offer low-interest federal disaster loans to small businesses in Massachusetts and other states. State government is also stepping up with loans and some targeted tax relief.

That helps some — but it’s not the answer for everyone.

With a crisis of this magnitude, there are no silver bullets. But there are steps state government can take to ease the overall pain. “The key here is a liquidity crisis, as too many costs remain as sales plummet,” said Jon Hurst, president of the Retailers Association of Massachusetts. “Many small businesses don’t want more loans — rather, avoidance of future mandated costs.”


As joblessness claims soar, most attention has focused on helping workers. That’s appropriate. But ensuring that businesses survive the coronavirus disruption will protect workers too.

Last week, Governor Charlie Baker threw a lifeline to the restaurant and hospitality sectors by announcing plans to postpone the collection of regular sales, meals, and room occupancy taxes that 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 meals taxes and businesses that paid less than $150,000 in room occupancy charges.

Baker also announced a $10 million loan fund to provide emergency capital up to $75,000 to Massachusetts-based businesses that employ under 50 full and part-time employees. Three days after its launch, the emergency fund was so overwhelmed, it stopped taking applications. On Friday, the Baker administration announced that officials will meet this week to vote on making an additional $10 million available. But the state loan fund is not reopening to additional applicants. According to a spokeswoman for the governor, they will have to apply to a federal emergency loan program available through the Small Business Administration.


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

And, with thousands of layoffs now occurring daily, the governor 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 relief, commercial and residential rent abatements; a moratorium on commercial and residential evictions; and immediate and expedited legislation providing compensation to restaurant workers, regardless of citizenship status.

But relief shouldn’t be doled out sector-by-sector based on the loudest and most organized lobbying efforts. The coronavirus can attack anyone, in any line of work or small business operation — from those who work in small retail and personal service businesses on Main Street to those who repair roofs or install kitchen countertops. Most small businesses survive on the thinnest of cash margins. According to a 2016 small business study conducted by the JP Morgan Chase & Co. Institute, companies with fewer than 500 employees have a cash buffer to cover about 27 days. But the more typical small business, which is much smaller than 500, can cover no more than a week or two.


Those small business owners don’t need more debt from loans. To survive, they need more cash on hand, Hurst said.

With premium payments coming due in April, the state can issue new guidelines relative to the continuation of health insurance. It can make workers compensation coverage during the crisis reflective of actual payroll on a month-to-month basis — not based on payroll as of the Jan. 1 renewal date.

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

To save the small businesses of Massachusetts, the Baker administration will have to think big. And it should act fast, because these businesses 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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