COVID-19 creating ‘Great Recession’ for small business

Friday, March 20, 2020

Before the first case of COVID-19, the economic fallout of the pandemic is already being felt in the Storm Lake community.

Downtown Lake Avenue looked more like a Sunday night than a weekday afternoon. Where people normally circle blocks trying to find a parking place, entire streets were empty.

Nearly as many shops were shuttered as were open. Some had signs up explaining their reasoning or directing people to online shopping, such as The Buckle. Some had cut hours, some had simply shut off the lights and locked the doors.

The Sugar Bowl was among those continuing to operate fairly normally, though with a sign asking anyone who is ill not to enter.

“We’re doing everything we can to stay open as long as we are allowed to,” said co-owner Holly Schipper. The store has quickly adopted some new tactics to serve customers, including shopping by text message, curbside drop off for call-in orders, and sales directly over Facebook.

The traffic downtown is sharply reduced, Schipper said. “Of course people are staying in, we understand that.”

The SOS Thrift Store which helps to fund St. Mary’s schools is among the latest casualties, closing Thursday until further notice. With many of its volunteer workers over age 60 and at risk, the store can also no longer accept donations. People are asked to store their donation items until the store can reopen.

Grocery stores have cut hours, and HyVee, Fareway and Walmart have all added early hours reserved for seniors or those more susceptible to illness. Walmart has reduced hours for a second time to 7 a.m.-8:30 p.m. with an extra hour for seniors only from 6-7 a.am. on Tuesdays. Stored are also putting limits in place for the amount of staples and other often-hoarded items that can be purchased.

Following the governor’s shut-down order, most of the restaurants in Storm Lake remain open for carry-outs or call-in orders only.

“Some are making changes to how they do business, creating things like online stores. We’re seeing different reactions from different businesses, but they are all concerned and worried about what the future holds for them,” said Lee Dutfield of Storm Lake United.

“For the smaller business that operate on a tight margin or were already on the edge, this is devastating.”

A survey hosted by UNI is seeking to quickly document the COVID-19 impact on Iowa business, hoping to spur a disaster declaration that could free up low interest loans to keep struggling businesses alive. “Things are so fluid and constantly changing. Right now our main goal is to keep our businesspeople informed,” Dutfield says.

He encourages people to continue to patronize food places with carry out orders, and to consider ordering gift certificates ahead to help stores keep some income. “I’m sure people have seen the social media posts saying that if your local businesses have helped out your community and its events, now is the time to help them back - but the problem is, lots of people are getting laid off or having their work hours reduced, and they might not be able to help. It’s a crazy time.”

If a business in Buena Vista County has suffered economic injury, they can go to the BV County website: www.bvcountyiowa.com/index.php/about/news to complete the economic loss worksheet and email it to the Small Business Administration in Iowa. “We are hoping to get a SBA disaster declaration to allow businesses to receive assistance to recover from their losses.  There is also a fact sheet for businesses that details the types of assistance available,” County Emergency Management Director Amy Barritt said. 

Nine additional cases of COVID-19 were confirmed Wednesday and six more Thursday in Iowa, bringing the state’s total to 44. In her press conference Thursday afternoon, the governor acknowledged the impact, saying, “Iowa small business, I hear you.” She said that businesses have her commitment that the state will do what is necessary to keep business moving forward.

Thousands of small Iowa business owners are facing unprecedented economic fears and challenges as the nation grapples with COVID-19.

It’s a challenge for all businesses as they cope with quarantine orders and sick days.

But for small operations working with tighter margins, the unforeseen closures could be especially detrimental. Most local businesses have less than a month of cash on hand to weather a crisis, said Amanda Ballantyne, executive director of The Mainstreet Alliance. Immediate state and federal action is necessary so problems don’t compound on each other, Ballantyne said. The first she recommends is emergency cash flow.

“My concern is there’s probably still time to move at the city and state level to make sure systems are in place,” Ballantyne said. “This is not a hoax. This is not just the flu. This is something that might incapacitate our health systems and require social distancing for a long time.”

President Donald Trump’s administration is proposing an $850 million stimulus package. Part of it would support small- and medium-sized businesses and employees hurt by COVID-19. To help support small businesses,The Main Street Alliance recommends Congress pass immediate cash flow to owners, beyond the loans and tax breaks the House has already passed. It also recommends expanding unemployment insurance eligibility, which the state enacted earlier this week.

The problems stack on top of each other, Ballantyne said. If people lose their jobs, they can’t pay rent. If they have to care for children who are home from school, they can’t search for another job.

In other parts of the country, municipalities are offering emergency cash for businesses. The Seattle Office of Economic Development is offering grants up to $10,000 for small businesses suffering income loss from COVID-19. New York City is providing grants to businesses with fewer than five employees to help cover 40% of payroll costs for two months.

These types of initiatives need to extend across the country to help particularly vulnerable businesses, Ballantyne said.

“There’s still concern that … support will not arrive fast enough and won’t be enough,” Ballantyne said. “If the emergency aid is loans and payments, what happens when they’re due?”

Cindy Golding, a small business owner in Cedar Rapids, held a conference call with her employees on Monday to determine staffing and cut hours. Golding owns a vacation condominium business and she helps her son run a training company for non-profit organizations.

“Essentially, everything has been shut down, which means zero income, so you have staff where you say, ‘Well, we have nothing for you to do,’” Golding said. She compared the situation for business to the Great Recession.

COVID-19 (Coronavirus) and Unemployment Insurance Benefits for Employers

Questions and Answers

Question 1: We may experience a shut-down or layoff in response to the coronavirus. What do we need to consider?

Answer : If your business is considering a major layoff or shut-down, Iowa Workforce Development’s Dislocated Worker Program staff can help guide you through what will be a difficult process for your company and a difficult time for your employees. Our Rapid Response Team can help ensure compliance with federal regulations that apply to mass layoffs, and can provide a variety of services for your employees.

Question 2: We may need to reduce work hours; what options do we have?

Answer: Employers experiencing a slowdown in their businesses or services as a result of the COVID-19 impact on the economy may apply for the Voluntary Shared Work Program. This program allows employers to seek an alternative to layoffs — retaining their trained employees by reducing their hours and wages that can be partially offset with unemployment insurance benefits.

Visit https://www.iowaworkforcedevelopment.gov/voluntary-shared-work-frequently-asked-... to learn more about its benefits for employers and employees, and how to apply.

Question 3: If an employee receives unemployment benefits as a result of a COVID-19 related business shutdown, will the employer’s unemployment taxes increase?

Answer: All unemployment claims filed and paid as a result of COVID-19 will have the charges waived for employers. This means that an employer’s Tax rate will not be affected.

Question 4: If an employee receives unemployment benefits as a result of a COVID-19-related business shutdown, can the benefits be charged to the trust fund account?

Answer: Yes. All charges will be waived.

Question 5 : Can an employer require a worker to stay home for the COVID-19’s incubation period? Answer : Yes. The employer can require an employee to stay at home for the 14 day isolation period if they have traveled abroad or had contact with someone who visited an affected region. The employer should attempt to provide paid leave. If that is not available, your employee will be eligible for unemployment insurance benefits.

Question 6: I am an employer that needs to temporarily suspend operations or reduce hours for my employees to prevent the spread of the COVID-19. Would I be responsible for benefit charges for my employees who file unemployment?

Answer : No. Iowa Workforce Development will take the appropriate actions to waive the charges for those employers who are forced to do layoffs or reduce work hours for employees due to the COVID-19.

Question 7 : If I have 25 employees and need to do a temporary shutdown, do we need to file a WARN notice?

Answer : No. An employer only needs to file a WARN notice if they intend to shut down permanently. In a temporary layoff, a WARN notice would not apply.

COVID-19 (Coronavirus) and Unemployment Insurance Benefits for Employers

What if I have additional questions?

Should you have additional questions, please contact Iowa Workforce Development at 1-888-848-7442. The Iowa Unemployment Insurance Employer Handbook can be found here: https://www.iowaworkforcedevelopment.gov/employer-handbook . Iowa Workforce Development will not be able to provide legal or human resources advice. Please contact your legal or human resources representatives for those questions.

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