After the Kenney administration ordered bars and restaurants closed yesterday, and with more state restrictions on in-person business activity coming as the COV-19 pandemic spreads, we're starting to get a glimpse of what the city and state economic response will look like. Economist Adam Ozimek notes that, according to the JP Morgan Institute, about half of small businesses have less than 15 days of cash buffer before they're in the red, so the clock is ticking for especially federal politicians to make get cash out the door and into the hands of small businesses and workers fast. Cities and states may be able to act more nimbly, however, and any federal response would work partly through them.
Kennedy Rose of the Philadelphia Business Journal reports the City is working with PIDC to provide no-interest loans and grants to businesses with less than $5 million in annual revenue.
On Monday, the City of Philadelphia said it’s partnering with the Philadelphia Industrial Development Corp. to offer small businesses with less than $5 million in annual revenue a tiered support program that includes new grants and zero-interest loans.
PIDC’s existing programs aimed at helping small and mid-sized businesses maintain payroll and preserve jobs will expand, with more details expected to be announced soon. The measure from Philadelphia’s city government comes after the federal government more than doubled the U.S. Small Business Administration’s funding for low-interest loans, allowing small businesses to apply for emergency disaster relief loans. If approved, the businesses can quickly access up to $2 million in funding at a 3.75% interest rate for for-profit companies and 2.75% for nonprofits.
Each state must apply for the funding and will distribute it to small businesses, said Maura Shenker, director of Temple University’s Small Business Development Center (SBDC). Temple’s SBDC — which is funded by Temple, the state Department of Community & Economic Development and the SBA — will hold a webinar Wednesday at 11 a.m. to help businesses navigate the issues they’re facing, including finding alternative sales channels and applying for a SBA loan.
State government is also putting together resources for employers during the crisis, although it's much less clear at this point what state government plans to do to get cash out the door in time to prevent mass layoffs. So far Governor Wolf has waived the "waiting week" for people applying for unemployment benefits, but there's no word yet on how they'll increase access to liquidity.
The timing is challenging as it comes right at the start of budget season, and the pandemic and ensuing business closures mean revenues are going to come in much lower than what everyone expected just a few weeks ago. It's unknown thus far how much direct aid to state and local governments, or other authorities like transit agencies, could be a part of the federal economic package, but this is going to determine the scope of lower governments' ability to respond.
For the time being, all employers should fill out the City's business impact survey, which will be used to shape their response and allow them to communicate with businesses.