Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for October 28:
- Economic growth in Q3 more complicated than it might appear
- Why opening the economy isn’t necessarily good for small businesses
- State and local governments provided nearly $9.5 billion in small biz COVID aid, study finds
Complicated economic growth in Q3
“If you pull back on a rubber band and let go, it’s going to snap back. But then it kind of goes limp after that. I think we’re looking at a very lackluster growth rate [in the fourth quarter of the year].”
The last economic report from the Commerce Department before the election will likely show “blockbuster growth,” however economists warn that the numbers should be taken with a grain of salt.
While some believe that the report will show that the GDP expanded at an annualized rate of 30% during the 3rd quarter, it’s important to note that the economy shrank by more than that in the 2nd quarter and that overall recovery has been “wildly uneven.”
Meanwhile, absent additional stimulus funding from Congress, the Federal Reserve is running out of ways to support the economy based on monetary policy alone.
Opening the economy — could it harm small businesses?
“No one seriously monitoring economic activity thinks that dropping public health restrictions will pull these businesses back to profitability.”
As presidential candidates Joe Biden and Donald Trump tout the efficacy of their own COVID-19 response plans and stocks fall in response to rising infection rates, Europe and parts of the United States are already enacting restrictions to slow the spread. And while these new lockdowns might strike fear in the hearts of small business owners already on the brink of financial disaster, there’s a case for not calling for a wholesale reopening.
For starters, reopening businesses is largely symbolic since economic activity will still be curtailed by consumer behavior. Furthermore, without the protection of an official lockdown, banks and creditors can start foreclosing and small business owners will have no recourse.
$9.5 billion in small biz COVID aid
“Ultimately the 800-plus localized programs had helped small businesses in their communities stay afloat. They were able to not only keep small businesses afloat but also artists, and musicians.”
The Institute for Local Self-Reliance has found that state and local governments have provided small business owners with $9.27 billion in COVID-19 relief through 800 different regional programs.
Many of these programs have focused on providing SBOs with cash to meet immediate needs to pay rent or mortgage payments, reconfigure spaces for social distancing, and buy PPE to protect workers and customers alike.