The Small Business Administration has declared a statewide disaster in Vermont, making loans available for businesses affected by the COVID-19 pandemic. The loans offer up to $2 million with an interest rate of 3.75 percent per business. These loans might be helpful for some, but is incurring new debt during the current crisis a viable option? What is a small business? Using general definitions/estimates, small businesses make up 99 percent of U.S. businesses. A small business (dependent on type) may have up to 500 employees—about 89 percent of all U.S. businesses employ 20 people or fewer, and 23 million businesses in the U.S. have no employees. So, between or below 1–500 employees and up to $7 million in sales can identify a business as small. That’s quite an umbrella.
Many Vermont villages and towns, as well as neighborhoods in larger cities, are anchored by truly small businesses (micro-businesses). Even before the pandemic, the number of vacant storefronts in our towns shows how difficult it can be to sustain a successful business. What’s the reality of a loan being effective and helpful that charges 3.75 percent interest to businesses reduced to little or no income because of the pandemic? For many small business owners, depending on their business ownership structure, unemployment benefits are not an option.
Providing positive and effective relief for truly small businesses will require thinking outside the box and breaking away from the Small Business Administration’s definitions and regulations. The airline industry is requesting nearly half of their billions of bailout money in grants. Why not offer grants for small businesses as well? These are challenging times, to say the least. Financial business assistance needs to be presented in a realistic manner that will allow for attainable solvency for the many Vermont-sized businesses that anchor our communities and strengthen their fabric.
Bodo Carey, Worcester