The end of the American dream | Vox - Laura Entis:
July 29, 2020 - "Located in the middle of the New Mexico desert, Pie Town is as much a nostalgic idea as an actual place. Founded in the 1920s and named after a bakery that sold dried-apple pies, most maps no longer list it.... When Kathy Knapp and her family visited in 1995, there wasn’t even any pie, just a mournful sign on a boarded-up bakery.... A few months later Knapp bought the property ... her mom moved in, named the place Pie-o-neer, and started selling pies. Knapp took over the shop in 1997.... She’s been serving pies ... ever since.
"Until Covid-19, that is. In March, following public health state orders, Knapp closed the shop, a move she, like many American small-business owners, believed was temporary. But as the months wore on, utilities, overhead, and insurance piled up. When, in June, the governor of New Mexico green-lighted the reopening of restaurants only at a limited capacity, ... she closed Pie-o-neer for good.
"Across the nation, restaurants, startups, retail stores, art studios, and other storefronts are facing a fate not unlike Pie-o-Neer’s. Defined by the Small Business Administration as companies with fewer than 250 to 1,500 employees, depending on the industry, there are about 31 million small businesses in the US. Last year, they employed nearly half of the private workforce and created 1.6 million jobs. But heading into the pandemic, nearly half of small businesses had two weeks or less of cash liquidity on hand, according to a report from JPMorgan Chase, turning forced shutdowns and lost revenues into an immediate fight for survival.
"The government scrambled to provide relief, funneling $670 billion into loans for small businesses through the Small Business Administration’s (now exhausted) Economic Injury Disaster Loan, designed to help businesses cover operating expenses such as rent and health care benefits; and the Paycheck Protection Program, which incentivized businesses to keep employees on staff by turning loans into grants if most of the money went to payroll.
"There were flaws from the start. The first round of loan money quickly ran out; Ostensibly earmarked for small businesses, much of it nonetheless went to large restaurant chains like Shake Shack and Ruth’s Chris Steak House due to a provision in the program that based eligibility on employees per location. (Some companies, including Shake Shack, returned the money; others did not.) Recently released data shows that PPP loan recipients included private equity firms, lobbyists, major law firms, and businesses with financial ties to President Trump’s family and associates.
"And because loans had to be accessed through financial institutions, companies that had preexisting relationships with a bank were moved to the front of the line — even though, in many cases, these were the businesses most likely to survive without a loan, at least in the short term. Meanwhile, applications from smaller and minority-owned businesses that needed a lifeline weren’t prioritized and got lost in the shuffle.... Despite a second round of PPP funding, hundreds of thousands of small businesses have yet to receive aid. The result will inevitably be a spate of closures as mom-and-pop shops — laundromats, bodegas, dental practices, clothing stores, nail salons — are forced to shut down.
"''I think we are really looking at an extinction-level event,' says Amanda Fischer, policy director at the Washington Center for Equitable Growth, a nonprofit research firm."
Read more: https://www.vox.com/the-highlight/21320361/small-business-closing-covid-coronavirus-ppp-entrepreneur-economy-stimulus-loans
