Small businesses are trying to defer bills and secure emergency loans to stay afloat amid the coronavirus scourge as they await relief earmarked specifically for them in the $2 trillion stimulus package working its way through Congress.
The bill, approved by the U.S. Senate Wednesday and now awaiting action in the House of Representatives, also would provide an infusion of capital to small businesses deserted by clientele or shuttered as a result of lockdowns aimed at slowing the advance of the virus.
Newsletter Sign-up
Until the House approves the bill—it is expected to take it up on Friday—many small businesses are hunting for cash to pay what they owe, particularly to landlords and other lenders unwilling to bend on terms. Small businesses were fearful that even once the stimulus was approved, it could take a while to tap new loans. But Treasury Secretary Steve Mnuchin said Wednesday the process of getting an SBA-backed loan could be streamlined so it can be disbursed the same day.
“We’re nervous,” said Maurice Brewster, chief executive of RM Executive Transportation Inc., a San Jose, Calif.-based ground transportation provider that does business as Mosaic Global Transportation. “A lot of business—my sized business, small-, medium-sized business—we’re primed to go out of business.”
The Federal Reserve’s initial response to the unfolding crisis focused largely on providing liquidity to big corporations. The central bank last week said it would purchase short-term debt, or commercial paper, that large companies use to fund their operations. But many small businesses generally don’t issue debt and have minimal cash on hand.
Lawmakers authorized more funding this month for disaster loans provided through the Small Business Administration. The stimulus bill in the House also includes $350 billion in small business loan guarantees. And the Fed said this week that it will start lending to small and midsize businesses.
“A big difference between the last crisis and now is that the last crisis started on Wall Street and hit the big firms first, and then went down to the smaller firms,” said Rodney Ramcharan, a former Fed economist and now a professor at the University of Southern California’s Marshall School of Business. “I think this crisis is going the other way—it’s starting on Main Street and then going up.”
Small businesses like Mosaic are taking steps to shore up their cash positions, calculating which costs to cut and which payments to defer as they await emergency loans—and brace for the possibility of a prolonged slowdown.
The transportation company laid off most of its 114 employees two weeks ago, after companies started canceling conferences in the Bay Area, according to Mr. Brewster. California last week ordered all nonessential businesses to close.
Mosaic, which posted $11 million in revenue last year, still generates cash by providing daily shuttles for the employees in the Bay Area of Silicon Valley firms, including Facebook Inc. At present, Mosaic is running just eight shuttle routes, down from 70 before the pandemic, Mr. Brewster said.
He called his lenders to ask for deferrals on loan and vehicle lease payments, but said he got only a mixed response. He halted insurance on vehicles that aren’t in operation, one of Mosaic’s major expenses. And he applied for a disaster loan from the SBA, which he hopes to use to rehire employees.
“I’m hoping and preparing for two months,” Mr. Brewster said. “But my gut is telling me this is going to take a lot more than that.”
Other smaller businesses with less cash on hand are scrambling to fill budget holes. Darren Turner, owner of the Darren & Co. hair salon in Cincinnati, said a state-mandated closure last week gave him little time to prepare. He anticipated using income from booked appointments to pay employees, but came up $10,000 short.
Hoping to cover back pay, Mr. Turner contacted his payment processor, Heartland Payment Systems, and his bank, the PNC Financial Services Group, but was turned away, he said. He is in the process of applying for an SBA disaster relief loan; the website keeps crashing, he said.
Mr. Turner also owes state and local taxes. He expects to be delinquent. He also owes rent to a landlord who has demanded payment. Covering his expenses through April will require about $20,000, he said.
If he had had more time to prepare, he would have made sure he paid his employees first. Before his business had to close, he paid Duke Energy Corp. the salon’s monthly power bill, he said, only to get an email days later saying Duke customers who couldn’t pay on time wouldn’t lose power.
“I would have rather had my employees get their paychecks,” Mr. Turner said.
Write to Kristin Broughton at Kristin.Broughton@wsj.com
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
"assistance" - Google News
March 27, 2020 at 07:20AM
https://ift.tt/2Jkps08
Small Businesses in Limbo as They Await Coronavirus Assistance for Them - The Wall Street Journal
"assistance" - Google News
https://ift.tt/2Ne4zX9
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Small Businesses in Limbo as They Await Coronavirus Assistance for Them - The Wall Street Journal"
Post a Comment