The COVID-19 outbreak is decimating the global economy with company shutdowns and soaring unemployment. But in its aftermath, the world must be ready to rebound quickly. Small business and government can jumpstart this recovery by taking strong measures now to limit the damage and establish a strong foundation for regrowth.
The recommendations below can ensure companies and their surrounding communities avoid mass layoffs, have ready access to capital, and take advantage of new opportunities. Putting them into practice requires steady leadership and operational discipline. Small businesses should:
Reduce hours for non-essential personnel rather than engaging in widespread layoffs. This more moderate approach will minimize employees’ loss of income and the strain on unemployment insurance systems, and allow firms to ramp up quickly once the virus is contained.
Use available lines of credit as soon as needed. Given the scope of the crisis and likelihood of further disruptions in the lending environment, this will help firms avoid future problems accessing cash to cover operating costs.
Open lines of communication with creditors and suppliers to increase flexibility. Firms will be better prepared to address disruptions in transportation, logistics and trade resulting from the virus if they do not face onerous short-term financial obligations.
Reexamine long-term spending plans. Social distancing has not only necessitated reducing non-essential costs but also provided opportunities for companies to consider investments in new business lines. These potential areas include e-commerce and delivery options for retailers, restaurants and grocery stores, and expansion of network-enabled tools for communication and collaboration.
Meanwhile, state and federal policymakers must create a strong, economic stimulus package that targets small businesses, which employ half of U.S. workers and have been particularly hard-hit by the economic collapse.
Because the U.S. economy is over $20 trillion, current plans for a $2 trillion recovery plan may not be sufficient to minimize job losses and establish a meaningful return to health. One important priority at the federal level is a package that expands the Small Business Administration’s (SBA) loan portfolio.
State and local governments must also use recovery funds to expand procurement opportunities for small business, particularly minority entrepreneurs.
SBA loans are already a crucial source of capital for underserved communities, and by using additional funds to support employment through government purchasing, the economic stimulus can contribute to a swifter, more sustainable recovery.
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