HUNTINGTON — On Sunday, Marshall Hall of Fame Cafe announced it was temporarily closing because of the economic downturn caused by the coronavirus. It was one of many closings announced by businesses in the past few weeks.
Just a little over a week ago, Paula Vega Cakes on 9th Street in Huntington closed its doors because of the virus.
“We were trying our best to survive the corona crisis,” owner Paula Vega said. “We had been doing well with the wonderful support from the community, but in reality I was working only half my staff and making only half the production for the last couple of weeks.”
Vega said the cake shop will remain closed until the crisis passes.
A new poll released Friday from the U.S. Chamber of Commerce and MetLife reveals that about one in four (24%) small businesses already have shut down temporarily in response to COVID-19. Among those that have not, 40% say they are likely to close at least temporarily within the next two weeks. This means a total of 54% of all small businesses report that they have closed or expect to close temporarily in the next 14 days.
“The business owners I’ve spoken to are considering their closures to be temporary in nature, but there’s concern based on how long they’re expected to remain closed,” said Bill Bissett, president and chief executive officer of the Huntington Regional Chamber of Commerce, which represents more than 550 businesses in Cabell and Wayne counties. “As rent, loan payments and other financial obligations become overdue with no incoming revenue stream, there becomes a point of no return.”
Dr. Avinandan “Avi” Mukherjee, dean of the Lewis College of Business and its Brad D. Smith Schools of Business at Marshall University, says the government is not allowing certain types of business transactions, thus creating a unique problem.
“The period of time this is not allowed or restricted will determine how many businesses will go out,” Mukherjee said.
He added that he thinks West Virginia’s and the Tri-State region’s numbers are in line with the new poll.
“Our numbers might be a little higher, but all small businesses across the country are facing the same issues right now,” he said.
The poll also revealed an even more ominous statistic. It showed that one in four small businesses (24%) say they are two months or less from closing permanently.
“We haven’t seen economic numbers like this since the Great Depression,” Mukherjee said. “This will force businesses to examine their current business models and adapt to what is now the new normal, which includes more technology to allow for more remote consumer transactions.”
The poll showed about one in 10 (11%) small businesses are less than a month away from permanently going out of business.
When asked what proposals might offer the most relief, small businesses indicated support for three key provisions included in the recently enacted Coronavirus Aid, Relief and Economic Security (CARES) Act. Fifty-six percent of small businesses say direct cash payments to Americans would be the most helpful form of aid from the government, followed by loans and financial aid (30%) and suspending payroll taxes (21%).
“While there’s a number of relief programs either in process or announced, the concern is if the funding can make it to business owners fast enough for them to hang on and later restart their business,” Bissett said. “There’s also the concern about the many businesses that are dependent on other businesses for their livelihood, such as law firms and accountancies. When we lose one business, the economic damage often goes well beyond that singular operation.”
“As the poll results show, small-business owners are looking for loans and financial aid to ensure they do not have to shut their doors or go bankrupt because of the coronavirus. American banks are ready to help, but they need clear guidelines from the administration,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, in the release announcing the poll. “American banks will be on the front lines to help businesses survive during this pandemic.”
To read the full report, visit https://www.uschamber.com/report/special-report-coronavirus-and-small-business.
“Small businesses have taken an enormous hit from the disruption caused by the coronavirus outbreak, and we don’t want small businesses to fail because they aren’t aware of what’s being offered,” Tom Sullivan, vice president of small-business policy at the U.S. Chamber of Commerce, said in the same release. “The Chamber has created numerous step-by-step guides to quickly help small businesses access the financial aid they need and better understand the relief available through the CARES Act.”
For small-business resources on the coronavirus, visit uschamber.com/co. Step-by-step guidelines on applying for a loan through the Paycheck Protection Program are available at www.uschamber.com/sbloans.
A guide to the Small Business Administration’s expanded Economic Injury Disaster Loan Program (EIDL) program to assist small businesses is available at www.uschamber.com/report/guide-sbas-economic-injury-disaster-loans.