GPEC: Despite Federal Relief, Many Small Businesses Could Go Under
President Trump signed a $484 billion relief package Friday that continues funding for small business loans during the coronavirus pandemic. The package includes the second phase of Paycheck Protection Program loans for small businesses, and businesses can begin applying for those loans shortly.
Economic experts with the Greater Phoenix Economic Council held a webinar discussing the future of small businesses in metro Phoenix. Despite the federal relief programs, they say many small businesses will fail.
Restaurant sales are down nearly $30 million, and city of Phoenix Community and Economic Development Director Christine Mackay says even restaurants offering carry-out are only seeing about one-third their typical revenue. Only about 40% of retail and restaurant businesses made their rent payments this month.
"The No. 1 thing that we hear from (small businesses) is access to capital," she said. "They had about three or four weeks of runway to be able to get through this thing, and they're approaching the end of that now."
Five weeks ago, Mackay says her phone calls to businesses owners were usually optimistic. Now, she says she hears desperation in their voices.
"Just from the calls we’ve made and the data that we have, I would estimate that somewhere between 20 and 25% of the region’s small businesses won’t be standing when this thing is over," she said. "It's going to be deep, and it's going to be brutal. We're working to help those businesses any way we can to see the light at the end of the tunnel and hang on just a little bit longer."
Chris Comacho is the CEO of the Greater Phoenix Economic Council. He says his organization is working to connect small businesses with these federal loans - but they most likely won’t be enough to help most businesses.
"Say that through the second phase that one-third of our businesses do get covered by the PPP, that still leaves two-thirds of our businesses under-resourced ... in a time in which the data reflects the average cash buffer for small businesses in the U.S. is 27 days," he said. "And we’re at day roughly 30."
In the first phase of loans, only 17% of businesses got funding. The application process complicated and bureaucratic, so the council created an online help desk that allows any business in Arizona to access the forms and chat with loan experts.
"We have to get our small businesses filing for these federal dollars," Comacho said. "Once they're gone, they're gone. This is a massive cash injection at stake, and I believe it absolutely plays into our ability to recover from the COVID-19 impacts."