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Small businesses seek answers to uncertainty in federal stimulus

Grants, loans, and an expansion of unemployment benefits are all components of the plan

Michelle Barrett said she’s hesitant to take federal funds, as she doesn’t want to take on debt and wonders whether she would even qualify.Jim Davis/Globe Staff

Michelle Barrett baked herself a tiny cake last week, and posted a picture of the white buttercream confection on the Instagram page of Kind Goods, her Maynard boutique gift shop.

“Maybe I’ll make a tiny cake for every week my business survives this mess," she wrote. “Like a birthday cake but more like a ‘I didn’t go under’ cake.”

Barrett, a ceramist who also recently opened the Sugar House gift store in Cambridge’s Inman Square, is among the many thousands of business owners in Massachusetts and around the United States trying to sort out whether the federal stimulus plan will help them survive the economic collapse caused by the COVID-19 pandemic. A legion of small business owners have shuttered their storefronts and laid off staff because of the crisis.


“Every little bit helps,” she acknowledged. “But what if it doesn’t help enough and you end up closing anyway? What good does that do?”

The $2 trillion stimulus package, which was passed by the Senate and is awaiting a vote in the House, would offer several relief options for small business owners. A $10 billion emergency grant fund will award $10,000 grants to small businesses that have applied for economic injury disaster loans so that they can offer paid sick leave or maintain payroll for workers, or to cover production costs or pay business obligations like rent and mortgage payments. Those grants will not need to be repaid.

The second component is the Paycheck Protection Program, a nearly $350 billion fund that will provide eight weeks of assistance to small businesses that maintain their payroll during the emergency. The loans would be available to companies with 500 or fewer employees, and would include nonprofits, self-employed people, and hotel and restaurant chains with up to 500 workers per location. If the companies maintain payroll for the eight-week period, those loans would be forgiven.


And the third piece of the bill would drastically overhaul the eligibility requirements for unemployment insurance, which would expand benefits to gig workers, the self-employed, and workers who may be furloughed but are still receiving health insurance from their employers. There would also be a $600 increase to the weekly benefit for four months.

“This is all designed to get money into people’s hands now,” said Massachusetts Senator Elizabeth Warren, who joined Boston Mayor Martin J. Walsh on a Thursday morning conference call with over 1,000 small business owners to explain the nuances of the legislation.

“This is an unprecedented response to an unprecedented crisis," Warren continued. “And everyone is working in good faith to try to both respond to the health needs of people across this country and to cushion the economic blow from the coronavirus outbreak.”

Todd McCracken, president of the National Small Business Association, an advocacy group representing about 65,000 companies, was optimistic that the bill would work to help small businesses weather the disruption.

“It’s going to help a lot of small businesses get through a very tough time. Every day more small businesses are laying people off or facing the decision about what to do,” he said.

The next question is how quickly the details will be finished. The program is designed to speed money to businesses by allowing the loans to be made by private banks, McCracken said. The federal government then would pay off all or a percentage of the loan based on how many employees are kept on the payroll.


McCracken hopes that businesses could get the loans in the next two to three weeks. On Wednesday, Treasury Secretary Steven Mnuchin indicated that they would be distributed within that time frame.

Kevin Kuhlman, senior director of federal government relations for the National Federation of Independent Business, said the organization is cautiously optimistic that the small business provisions in the stimulus bill are large and broad enough to deal with the crisis.

“Our members are telling us they need cash flow and liquidity and they are reluctant to take out either traditional or disaster loans during such an uncertain time,” he said. “The hope is that this program will provide that liquidity and cash flow that allows them to keep employees on at least for the next two to two-and-a-half months."

Kuhlman said it was unclear if $350 billion would be enough for the paycheck protection program but was encouraged that Senators Marco Rubio of Florida and Susan Collins of Maine, who wrote the provision, have said they’re open to revisiting it if needed.

Kuhlman pointed out that the crisis struck as his group’s monthly small business optimism index was near an all-time high and employers were struggling to find qualified workers.

“I don’t think there’s been anything quite like this, to go from potentially the best of times to the worst of times,” he said. “We’re all looking for a little bit of hope to get through this.”


While local small business owners are still deciphering the stimulus bill, many are tentatively hopeful that the bailout would be enough to keep them afloat.

Stuart Segel, the owner of the Mr. Sid menswear stores, has had to furlough 18 employees between his Newton and Seaport locations. “It’s definitely very sad," he said. "I think every one of my staff members — some of whom are people I’ve worked with for 40 years — they’re very understanding, we want to survive this,” he said. He’s optimistic the relief package will help him reopen after the outbreak subsides.

“It’s a support system is how I look at it. It’s a lifeline,” he said. “It’s giving us two months to reapproach our business.”

But some small business advocates worry current proposals won’t be enough to repair the damages that may still be in store if the economic shutdown persists.

“Given the scale and depth of this crisis for small businesses, and given the scale of the economy that small businesses represent in this country, we needed a $1 trillion small business bailout and they failed us,” said Gustavo Quiroga, the director of neighborhood strategy and development at Graffito SP, a real estate development and urban design firm with a small-business retail leasing practice.

He said small businesses contribute $6 trillion to the US economy and account for 99 percent of all businesses in Massachusetts. In the absence of significantly more federal aid, he said, the onus is now on local government to find ways to support businesses that are being hit hardest.


“It’s time for Beacon Hill to step up and take leadership to fill the gaps,” he said, which could take the form of waiving state and local meal taxes, reforming business interruption insurance claims, and protecting both business owners and their workers with anti-eviction protections for commercial and residential tenants.

Barrett, the gift shop owner, said she’s hesitant to take federal funds, as she doesn’t want to take on debt and wonders whether she would even qualify. “How do I find enough work for seven people to do when my store was forced to shutter?” she asked. “If you’re selling baskets from Morocco and handmade pottery and not lentils and toilet paper, you’re not busy. I don’t have enough work for them to do. I’m not a grocery store.”

So she’s glad the expanded unemployment provisions will allow her seven employees to get benefits, and she’s considering taking a small business grant that’s being offered through the City of Cambridge.

In the meantime, she’s moved mostly online, hosting shopping tours of her products on Instagram, or doing “window shopping” sessions through the plate-glass windows of her Maynard store while her customers stand safely outside. She’s been hand-delivering all the purchases that her loyal fans make and hopes it will be enough to help her keep the shops open.

And as long as that happens, she said, there will be a weekly cake.

Jim Puzzanghera of the Globe Staff contributed to this report.

Janelle Nanos can be reached at Follow her @janellenanos.