Event planners such as Chris Sinclair were among the first small-business owners to feel the pinch.
The cancellations for Sinclair’s Boston events and marketing firm, The Anthem Group, started in February, as concerns about group meetings grew because of the coronavirus, and accelerated from there. By mid-March, Anthem had seen two straight months of revenue evaporate. Gone, in a flash.
So Sinclair was quick to respond when the City of Boston surveyed more than 1,000 small businesses last week. The results underscore how tough things will be. More than 55 percent said they lost at least half of their revenue, compared to February and March of last year, and a third said revenue fell more than 75 percent. (Anthem was in the latter category.) Presumably, the situation has since worsened for many of them.
Sinclair avoided layoffs — for now. He is keeping his 24 full-timers on Anthem’s payroll, moving many into new marketing roles, even with no revenue coming in the door. But he has only promised those jobs until May 1. Without some help from the federal government, he’s not sure how much longer he can pay all his employees beyond that point.
Anthem’s plight illustrates how much is at stake as state and federal officials race to offer assistance to small businesses. The latest potential lifesaver: a loan program totaling at least $350 billion included in stimulus legislation being pushed through Congress on Tuesday, to help small businesses keep the doors open. The details were still in flux, but here’s one underlying premise: Businesses that retain their employees for a certain period of time could have some or all of that money forgiven, according to the National Federation of Independent Business.
That might be a better alternative for Sinclair than the most widely touted form of assistance, the Small Business Administration’s $7 billion disaster loan program, which offers loans of up to $2 million with a 3.75 percent interest rate. The loans are offered on a first-come, first-serve basis, to help businesses cover operating costs. About 43,000 applications had been submitted as of Monday.
However, many small businesses are reluctant to take on additional debt, even though the SBA has agreed to postpone payments for up to a year. Plus, these loans can take a few weeks to turn around; SBA officials say they hope banks can offer financing to bridge the gap.
State and city leaders are also scrambling to find ways to help small businesses. It’s not always easy, especially without the federal government’s fiscal firepower.
The latest such effort: Governor Charlie Baker filed a bill on Tuesday, primarily aimed at helping cities and towns, but with a provision that would allow restaurants closed for sit-down business to sell beer and wine directly to consumers along with their takeout and delivery orders. Last week, the Baker administration agreed to delay the remittance of sales, meals, and hotel taxes for up to three months.
At Baker’s direction, the quasi-public Massachusetts Growth Capital Corp. offered loans of up to $75,000 for small businesses last week. That pool of $10 million was claimed within days, with 300 loans processed so far. MassDevelopment plans to add another $10 million later this week to catch up. But businesses that haven’t applied are out of luck; the fund is closed to new applications.
John Barros, Boston’s economic development chief, said the biggest issue he’s hearing from small businesses is paying their rent. Barros is talking with lenders about a collective solution. And he has talked with the Baker administration about some sort of state forbearance program for mortgages, akin to what Governor Andrew Cuomo launched in New York, that could ease the pressure for landlords.
Tamara Small, CEO of real estate trade group NAIOP Massachusetts, is pushing for such a program for commercial and residential mortgages. Meanwhile, she said, many landlords are cutting deals, sometimes delaying rent payments for up to three months for the tenants that really need it. They don’t want big vacancies before the pandemic ends.
Some banks are stepping up, too. Eastern Bank, for example, announced a coronavirus relief effort valued at more than $10 million on Tuesday. Included: a $5 million loan fund for small businesses in need of working capital, requiring that only interest be paid for the first six months. Citizens Bank pledged $5 million for virus-related relief, but it’s unclear how much of that would go to small businesses. And Santander committed $25 million to finance small-business loans through community development financial institutions.
Municipal officials, meanwhile, can help convene discussions, provide advice, and ease permitting. For example, Barros held a conference call last week that drew hundreds of worried owners of small businesses, and his team is making it easier for sit-down restaurants to shift to takeout.
At Anthem, the Boston events firm, Sinclair has applied for the SBA loan, though he would prefer a forgivable loan, such as what is advancing in Congress. For Sinclair and countless other small-business owners, time is running out.