From the Senate in the 1970s to the presidential campaign trail in 2020, Joe Biden has a long record of going where political pressures push him—and right now they’re pushing him aggressively leftward
Spring is a good time for tanning salon owners. People are eager to shed their winter sweaters and soak up warmer rays—and it’s also a time when they’re starting to fret about their vampire-pale skin.
That’s what JP Godman anticipated when he and his wife, Taryn, invested about $12,000 into a new tanning salon business they bought last September in Dry Ridge, Ky. They paid for new UV lamps, new paint, new equipment, new tanning lotions, all in preparation for their most profitable season. But now, as most counties and states across the country order “non-essential” businesses to shut down to curb the spread of COVID-19, the Godmans had to close shop.
The Godmans needed that money. Taryn had just delivered their third child, a daughter, on the night of March 17—the same day Kentucky Gov. Andy Beshear ordered the closure of non-critical businesses such as beauty salons, theaters, fitness centers and gyms, concert venues, and spas. That day, an employee called Godman while Taryn was still recuperating in the hospital bed, saying she couldn’t come to work anymore because her husband had been around someone who tested positive for COVID-19. It didn’t matter, because the following Thursday when the Godmans returned home, they had to shut down the salon and lay off all four employees.
Small businesses are floundering in great uncertainty and anxiety as the COVID-19 pandemic forces many to shut down, lay off employees, swallow huge revenue losses, and cross off any plans for the future. Unemployment claims climbed to nearly 10 million in early April as the number of confirmed coronavirus cases reached 1 million worldwide. On April 1, as millions of business owners pawed into dwindling funds to pay rent, employees, and other bills, the possibility that a shutdown could last several more months, not weeks, cast a silent and terrifying shadow: How long can they survive like this, before they lose everything they had worked so hard to build? Though an economic relief package brought some hope, it may not be enough to address long-term economic damage from the shutdowns for traditional brick-and-mortar businesses or e-commerce companies.
To bolster the flailing economy during this crisis, Congress passed an emergency $2 trillion economic aid package, which includes $367 billion reserved for small businesses in loans and payroll-tax deferment. The loans are for sole proprietors and freelancers. But as many small business owners pore through the program’s requirements and conditions, they also hear precious time ticking off the few days left before they run out of cash reserves and may have to shutter their shops for good.
Small businesses make up more than 99 percent of all U.S., businesses and employ more than half the American workforce. Small Business Majority founder and CEO John Arensmeyer said in a statement that the loan programs aren’t all that practical for small business owners who have seen steep drops in sales and customers. He called the legislation “a complicated, slow, and cumbersome process that is totally unworkable for small businesses and sure to leave the most vulnerable behind.”
The loan packages seem generous but come with many restrictions. The main program, the Paycheck Protection Program, provides loans up to $10 million. They are forgivable if the owner pays normal salary rates to all employees for eight weeks and uses the money for specific payments: rent, mortgage interest, payroll, or utilities. At least 75 percent of the loan must be used for payroll. Otherwise, owners must pay back the government with interest rates of up to 4 percent. Small businesses can also apply for emergency grants of up to $10,000, or get a capital loan of up to $2 million at 3.75 percent interest. Certain states and municipalities are also providing their own special emergency funding for small businesses and nonprofits. In Los Angeles, businesses and microenterprises that provide jobs to low-income communities can apply for an emergency microloan of $5,000 to $20,000.
Bobby Roshan, owner of Cafe Demitasse, a local coffee bar in Los Angeles, said he’s planning to apply for every loan and grant available. But he’s not sure if that will be enough to save his business. Under LA’s safer-at-home orders, his coffee shops can only provide pick-up and delivery services. Cafe Demitasse is known for its unpretentious, sun-splattered ambience and cool coffee gadgets. Few people, other than die-hard loyal customers, are going to fork over the extra cash just for Kyoto-style cold brew drip and lavender hot chocolate. Today, two of his three coffee shops are closed, and the only branch still open in Santa Monica is barely scraping enough cash to pay the six remaining employees—let alone his coffee importers, milk delivery, rent, pastries, and coffee beans.
Even if he pays all 25 of his full-time and part-time employees to work for eight weeks, what “work” is there for them to do in an empty shop that’s constantly running electricity, water, and internet bills? Even if the shutdown ends, will customers feel safe enough to cozy up in coffee shops again as they once did without a second thought?
“That’s the real scary thing that puts fear in our hearts,” Roshan said. “Even if they lift the quarantine, it doesn’t mean people will be out on the streets again. We’re entering a whole new era where people are afraid to go to shops, offices, restaurants … That’s one issue that nobody has an answer to: Why would I get all these loans and go into debt, just to find out that there’s still no point in keeping the doors open?”
And what if a second COVID-19 wave breaks out, as some experts predict? “Maybe with the help of the government, we can survive this first shutdown,” Roshan said. “But having a second shutdown where we have to fire more people? Forget it. Those people are gone. Suppliers, gone. Can you imagine?”
Already, two of Roshan’s four landlords have refused to grant him any kind of rent relief, not even a deferral. They told him to apply for SBA loans so he can pay them on time. Another landlord gave him an ambiguous “We’ll see.” The fourth landlord hasn’t responded to his pleas. Roshan has not paid himself since the crisis hit, and like most businesses in the retail and hospitality industry, he doesn’t have a cash stockpile for such emergencies: “They can stomp their feet, they can demand, but I have no money to give them.”
Meanwhile, Roshan’s wife is pregnant and due to deliver a boy in June. They haven’t left the house in weeks. What is supposed to be an exciting time for this new family is also terrifying and stressful as Roshan weighs all the unhappy and uncertain options before him. That includes a world in which he doesn’t reopen his businesses at all. For Roshan, that world won’t be too bad: His wife can support the family with her healthcare job, and he’s content to be a stay-at-home dad for a while. But he worries about his staff: “My heart bleeds for them. I’ll be OK, but there are a lot of people who are not going to be as lucky in a couple of months.”
Even e-commerce businesses are hit hard. While online companies selling fitness equipment, personal protection equipment, toys, and office supplies are booming, others struggle. Karl Liang owns a cell phone case company called Schnail in Dallas, Texas. He makes the majority of his sales through Amazon’s Sold By Amazon program, which helps price and fulfill orders for third-party merchants. But since the pandemic, Amazon halted the program for all products deemed “non-essential.” That included cell phone cases.
So far, Liang has lost up to 66 percent of his typical revenue for the last three weeks. He spends $200 a day to run ads on Amazon but makes less than $100. He has a warehouse full of inventory collecting dust. Liang is still paying his two full-time employees who work at the warehouse, but he doesn’t know how long he can do that while bleeding money each day: “If this keeps going, I cannot. Even if business is open again, I will still have a problem, because I believe people don’t want to spend money.”
Production is also a big issue. Businesses both big and small have manufacturing plants overseas, and as factories close down in countries such as China, Vietnam, and India, many companies face supply chain problems. Santiago Velez, for example, owns an e-commerce bikini company called 11Swimwear. His company is “make to order”: it begins manufacturing only after receiving a customer’s order. That cuts down on storage expenses and waste. But all his manufacturing factories are in Colombia, which on March 24 went into a nationwide quarantine until April 13. Now his company isn’t making any money at all.
Velez is based in Colombia but travels often to LA for business, where he is renting a house with his wife and three kids. They came to LA on Feb. 28, before the entire state went into an indefinite shutdown. When I spoke to Velez, his wife was due to give birth to a boy in five days. The family had no other income, yet he was still paying all his employees in Colombia who can no longer work. Like other business owners, he has no idea when the ripple effects of the pandemic will be over.
“I’m not as calm as you think,” he told me over the phone. “I just don’t want to burst out crying on the phone with you.” He tries to take things day by day, but sometimes his mind races toward the dark, scary unknowns: What if he and his family are stuck in LA for months? What will happen to his kids? What if truck drivers and delivery workers start contracting the virus, and the whole food supply chain crashes? What if police officers get sick and the already fragile law and order shatters? What if people begin rioting? “I don’t like to think too much because I get paranoid,” Velez said. “If you start thinking about the future, you go crazy.”
A week later, I followed up with Velez. This time, he seemed to be in a better place: His wife had given birth to a healthy boy, and he was able to be in the delivery room with her. “Thank God,” he said. “We’re all safe and healthy!” Always the entrepreneur, he was already working on a new project better suited for a quarantine era: He’s sourcing in China to develop a fitness clothing and gear business. The cries of a newborn baby and laughter of kids playing fill his temporary home in LA. Business might be shut down, but life goes on.