News: Quick Takes

N.C. could lose half of its small businesses as restrictions continue, group says

The general counsel of the NC Chamber offered an ominous prediction this week.

More than half of the state’s small businesses will close by mid-April if Gov. Roy Cooper’s stay-at-home order remains, Ray Starling told the House Select Committee on COVID-19 Economic Support Working Group.

Cooper issued an executive order March 17 ending seated dining at restaurants and private clubs. He later added a stay-at-home order affecting all other “non-essential” private businesses. It runs through April 29.

Roughly 25% of small businesses have closed already, Starling said in testimony Tuesday, April 7.  Among those that haven’t closed, 40% will close in two weeks if restrictions aren’t lifted, he said.

Other businesses will suffer as hours dwindle. 

Gregg Thompson, state director of the National Federation of Independent Business — with 7,000 members in North Carolina — said the pandemic has hurt 92% of small-business owners. 

“I think the daunting, real question here … is, When do these losses become unrecoverable?” Starling asked. “At what point do small businesses say, ‘I’m going to shut down and give away the key’?”

An NFIB survey of independent business owners indicates the largest decline in its small business optimism index since 1973, the first year for the survey, Thompson said.

“Nine of the 10 Index components declined, which is evidence that economic disruptions are escalating on Main Street as small businesses struggle to keep their doors open,” the organization notes on its website. 

The restrictions result in a market “double whammy” of low demand and low consumer confidence, Starling said. Consumer spending typically constitutes 70% of the U.S. GDP.

A significant portion of that spending flowed to restaurants until last month, when the state closed all restaurant dining options except for takeout, pickup, and delivery. Until then, restaurants received 50% of the American food dollar; that’s money now spent either in grocery stores or not at all, Starling said.

The state’s restrictions burden businesses that use global or complex supply chains, including those relying on Chinese manufacturing, Starling said. Businesses depending on air cargo transport also feel the pinch, as a significant amount of air transport occurs on passenger planes, only a third of which now operate.

Large suppliers typically fare better with supply chain disruptions than smaller ones, Starling said. Small manufacturers usually rely on a single supply source, but larger producers can spread demand.

A number of businesses depended on relatively cheap credit over the past decade. But credit rates are changing, and businesses and individual borrowers are heading for a crunch, Starling said. Private lenders hesitate extending credit terms to businesses with reduced operations.

Access to personal protective equipment also worries employers, Starling told the committee. One business donated 5,000 masks to a local health care community a couple weeks ago, only to discover it could provide no masks for its own employees when state health officials began encouraging people to wear them.

The legal community is considering protections for companies trying to comply with state orders, Starling said, including those facing allegations of false marketing about their products fighting disease, he noted. Another consideration would be protective measures for businesses that have started manufacturing personal protective equipment themselves. 

Further, he said, labeling a manufacturer essential in one part of the state but non-essential in another part creates an unfair playing field, and business owners need more information about the state’s plans to re-open the economy. 

“The notion that, ‘I will know it when I see it’ really doesn’t give me as a business owner the confidence I need to go back out and put those employees back on the payroll,” he said.

 



  • Justanaveragejoeinsc

    If we do not get these businesses back, we will go into a Depression which will be far, far worse. And with China wanting to be the lead economy and culture in the world, war will follow that will kill millions we are lucky – if it goes nuclear with even a few weapons, it will be tens or hundreds of millions.

  • plusaf

    So, if government mandates that businesses shut down to ‘save lives’ at the cost or risk of the businesses’ bankruptcy, should the “government” make them whole? Remember, please, that the ‘government’ HAS NO MONEY of its own to do that…

    EVERY Penny it could use to ‘solve this problem’ comes from ONE SOURCE… tax revenues, so if people and employees and employers are to be supported financially through this disastrous situation, it MUST be acknowledged that WE, the TAXPAYERS MUST be willing to accept ALL of the costs, immediate and future, to ‘fix this.’

    Virtuallly nobody thinks of it in those terms, leastwise government officials and mass media outlets.

    There probably are NO simple, easy, quick solutions, but, again, the mass media will never admit that while they sound the alarm and voice the obvious need for such simple, quick, easy ‘solutions.’ That’s not the job they signed up for. That’s not how or where they make THEIR money.

    So, one potential solution MIGHT be to just allow ALL businesses to reopen, but encourage them to do so in the safest possible ways… masks, gloves, etc., if they deal fairly directly with their customers, and with whatever other precautions would be appropriate if direct customer contact is not part of their operations.

    If there’s ANYTHING I’d like to see our government officials enact, it would be regulations to prevent hostile takeovers of our major corporations by Foreign Governments or corporations… yes, the Chinese, in particular, whose government has been well-implicated in the creation and promulgation of the virus pandemic.

    Personally, I believe that they ARE culpable, and the virus is/was part of a Strategy to punish the US for the Trade Wars Tariffs imposed on them.
    No, they couldn’t/wouldn’t launch ICBMs, but in this day and age, as bioterror strategy can be as economically devastating and harder to prove, yet still monstrously effective. If their strategy were to leapfrog the US’ economy in terms of GDP or growth, what better way than damage our economy, even if it means sacrificing citizens of our country AND Theirs in the process?

    Time will tell…. but in the meantime, there are NO safe ways to ‘restart the economy of the US’ unless or until EVERYONE has been TESTED for the virus AND/OR TREATED for it and/or Vaccinated to prevent it…. and none of those processes are 100% effectove or 100% Risk-Free, which is clearly what most of the mass-media are demanding.

    Fools and idiots.

    Now copy and forward this to everyone from the POTUS to your Governor and congresspeople and suggest they mull THAT over before talking any more. Thanks.