The Small Business Die-Off Is Here
Article

The Small Business Die-Off Is Here

Many small businesses won’t survive, and that will change the landscape of American commerce for years to come.

The Atlantic, 2020

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If you imagine that the US economy will ricochet back from the pandemic, creating a “V-shaped” line on the proverbial economic recovery graph, The Atlantic’s economic policy reporter Annie Lowrey suggests you curb your optimism. The curve of economic recovery will be decidedly “U-shaped,” she says, due in large part to the loss of small businesses. Given their crucial role in fueling innovation, productivity, higher wages and lower prices, the loss of small businesses may create a cascade of negative consequences.

Summary

The United States bungled its small business loan program so far.

The United States faces a completely new challenge: keeping most of its small business solvent. The government understands, or at least has vast experience in, supporting the “economic system,” but not as it relates to small businesses. Credit card transactions reveal that approximately 30% of small businesses have closed because of the pandemic. “Transaction volume” numbers are bleak: travel agencies have lost 98% of their business; photo studios 88%; day-care centers 75% and ad agencies 60%.

Though the Donald Trump administration and Congress created a $350 billion loan plan for small businesses, and have added another $320 billion, implementation issues have been daunting. Applications swamped baffled banks. Small business owners did not understand what paperwork they had to provide or for what funds they were eligible. Four out of five applicants had no idea if they could or would receive funds.

A great deal of the money flowed to the companies that probably would survive without it. Loans worth more than $1 million – far more than most small businesses...

About the Author

Annie Lowrey covers economic policy for The Atlantic. She previously held staff writer positions at The New York Times and Slate. She is the author of Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.


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