More than 100 current and former corporate CEOs have sent a letter to Congress pushing for a relief package that specifically props up small businesses with loans that go beyond the federal Paycheck Protection Program.
But a lot of the names on the list are actually CEOs of major U.S. corporations, like Starbucks, Walmart, Dunkin’ Donuts and Ulta. Why do such large corporations care about small businesses?
Remember in, like, sixth-grade science class when you learned how every part of the environment is connected?
Say an invasive species of fleas ends up in a lake. And those fleas eat all the plankton. Then the fish starve because they usually eat the plankton. And on and on. Neil Bradley at the U.S. Chamber of Commerce says the economy is kinda like that.
“We think of it as an ecosystem,” he said.
To survive, big retailers need small businesses. They make a lot of the products that we all buy. Think about that when you walk into a big-box store.
“You go back to the sporting goods department, and maybe you’re buying fishing lures to go out and go fishing. You’ll find that many of those things are made by small businesses,” Bradley said. “You go into the crafts department, you’ll find the same thing.”
So if those businesses are closing, retailers might have trouble stocking shelves. Also, small businesses are a large part of the economy — they produce about 44% of U.S. GDP.
“They employ 58.9 million Americans,” said Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council. “So, you know, these are people that shop at a lot of these big businesses, these big retailers.”
And if they don’t have jobs, they may be less willing to spend money at Walmart or Ulta.
The CEO letter asks Congress to create a new loan program for small companies that lasts more than a few months. They want it to include at least partial loan forgiveness and target loans to businesses owned by people of color, who’ve traditionally had less access to them.
COVID-19 Economy FAQs
Are people still waiting for unemployment payments?
Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.
Are we going to see another wave of grocery store shortages?
Well, public health officials are warning that we could see a second wave of the virus before the end of the year. And this time retailers want to be prepared if there’s high demand for certain products. But they can’t rely totally on predictive modeling. People’s shopping habits have ebbed and flowed depending on the state of COVID-19 cases or lockdowns. So, grocers are going to have to trust their guts.
What’s going to happen to retailers, especially with the holiday shopping season approaching?
A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.
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