As COVID-19 continues to ravage the world, it is not just people who are affected, but small businesses as well. While major corporations seem to weather the storm, small businesses are being hit hardest by the pandemic, with many being forced to close permanently due to bankruptcy.
One of the primary reasons for this surge in small business bankruptcies is the lack of financial reserves. Unlike major corporations, small businesses typically do not have the financial cushion required to survive an extended economic downturn. This is especially true for those small businesses that are just starting out or are in their early stages.
Another reason is the sudden decrease in demand for non-essential businesses. Due to social distancing measures, many small businesses such as restaurants, cafes, cinemas, and malls have seen a significant decrease in foot traffic. This has led to a sharp decline in revenue, rendering many of them unable to pay rent, wages, and other operational expenses.
Moreover, the government’s stimulus measures have not been enough to keep these businesses afloat. Although the CARES Act provided a lifeline to some small businesses with loans and grants, it was insufficient to address the magnitude of the crisis. The Paycheck Protection Program (PPP), a cornerstone of the CARES Act, had numerous hurdles that made it difficult for many small businesses to access the funds. Furthermore, the grants offered were not enough to cover their expenses, and the loan forgiveness stipulations were too stringent.
The bankruptcy process is taking a heavy toll on small business owners as well. With years of dedication and hard work poured into their venture, it is devastating to see it all vanish in a matter of months. The emotional and mental wellbeing of these entrepreneurs is also suffering, with many feeling helpless and uncertain about their future.
In Conclusion, the COVID-19 crisis has amplified the vulnerabilities of small businesses, revealing the shortcomings in the government’s response. While it is difficult to predict when the pandemic will end, there is no doubt that the impact on small businesses will be felt for years to come. It is crucial that the government takes necessary measures to support and protect small businesses, as they not only serve as a source of livelihood for the owners and employees but also contribute significantly to the economy.
