Small businesses across the U.S. are struggling right now, and those in Chicago are no exception.
Small businesses are not just mom-and-pop shops and restaurants. They also include nonprofits, the self-employed, professional offices, and others, as long as they have fewer than 500 employees and have been in business as of February 15, 2020. And with the economy nearly at a stand-still due to the coronavirus, these organizations are struggling.
By Friday last week—the first day applications were open—applications for small business loans had already amounted to nearly $5 billion. And with the virus’s peak not projected to hit in Illinois quite yet, the impact will still be felt for a while.
We reached out to Andrea Zopp, the President and CEO of World Business Chicago, to better understand the scope of the impact of this crisis on small businesses in Chicago, learn how various government agencies are trying to help, and identify ways we can all band together to support each other during this crisis.
Chicago Ideas (CI): How is the coronavirus affecting the health of the Chicago-area economy?
Andrea Zopp (AZ): It goes without saying, we are witnessing an unprecedented global economic event, one that impacts the economy of the entire world. And there are still many unknowns.
While the necessary steps taken to combat the spread of COVID-19 have significantly slowed the Chicago area economy, particularly our tourism and hospitality sector, our economy is one of the most diverse in the country with no more than 14% of our GDP coming from any one sector which means that the impacts from coronavirus are spread across a broader number of economic sectors and give us a strong base to go through the crisis and for recovery.
Additionally, the city, state, and federal governments have all stepped up to provide relief and resources to businesses impacted by the pandemic. These resources include the City’s Chicago Business Resiliency Fund, the state’s Illinois Small Business Emergency Loan Fund and the Arts for Illinois Relief Fund, and the federal government’s CARES Act among many other steps that have been taken.
CI: What has been the biggest challenge that business leaders have had to face during this pandemic?
AZ: The challenges facing business leaders are significant. At the top of the list is protecting the health and safety of their employees. For many this includes moving to virtual workplaces but for others that have been deemed essential it means providing the necessary personal protective equipment (PPE) and work environments that keep people safe during this pandemic.
Businesses leaders are developing new ways of working, new ways of connecting with customers, new ways of managing their supplies chain. In short, across the spectrum business is being required to innovate and be flexible and nimble. And across our region we see company after company stepping up to the plate.
CI: Why are small businesses in particular more vulnerable to disruptions like this?
AZ: Access to capital and liquidity have always been a challenge for small businesses. Many small businesses have been forced to close or drastically reduce their operations and many do not have sufficient reserves to weather a long break in their revenue streams. But efforts have been created at the federal, state, and city level to help small businesses get through this crisis, like the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act that President Trump signed into law on March 27, which lifts the burden of payroll costs from employers during this fallow period and to ensure that employee salaries and benefits continue to be paid.
Beyond that, Mayor Lori E. Lightfoot recently announced a program that will fund $100 million in low-interest loans through Chicago Small Business Resiliency Fund, the City’s unprecedented effort to support Chicago’s small businesses that are experiencing a temporary loss of revenue as a result of the coronavirus (COVID-19) outbreak. The fund will provide immediate stop-gap relief to thousands of small businesses in Chicago.
CI: What do you think the Chicago economy will look like in 6 months?
AZ: While we do not yet know exactly when the virus will peak in Illinois or the country, it is not too soon to begin thinking about the steps we will need to take to begin an economic recovery. There is no question that in many ways we will operate and live differently and that the economic impacts from the pandemic will be severe. Many economists have come to the view that coronavirus disruptions will trigger a global recession.
Last week, the International Monetary Fund said it sees negative global growth this year, and warned that we’re facing “a recession at least as bad as during the global financial crisis or worse.” On the other hand, former Federal Reserve Chairman Ben Bernanke, who stewarded the US economy through the 2008 financial crisis, told business news network CNBC that the current shock the US economy is experiencing from coronavirus is “much closer to a major snowstorm or a natural disaster than it is to a classic 1930s-style depression” and many expect that our economic recovery will come more quickly that it did after the 2008-2009 recession
CI: How can people help make a difference?
AZ: First and foremost—it can’t be stressed enough—stay home, limit your time out taking care of essential needs. Very simply put: Stay home. Save lives.
Our local, small business community needs us now more than ever—so whenever you go out to shop, keep your dollars local; support your local restaurants with carry-out or delivery, and when you do—share all your local positive experiences on your social media.
Last, donations are much needed too. In collaboration with the City of Chicago, The Chicago Community Trust and United Way of Metro Chicago launched the Chicago Community COVID-19 Response Fund to unite funds raised by Chicago’s philanthropies, corporations, and individuals to be disbursed to nonprofit organizations across the region. Let’s not forget the impact this will have on our neighbors. Missing paychecks, the burdens of rent, and a lack of access to food are realities that many in our region will have to face in the coming weeks. Support your neighbors across the City of Chicago and the surrounding suburbs.