Whatcom survey shows strong need for cash infusion into businesses due to coronavirus
As Whatcom County businesses struggle to stay afloat during this coronavirus pandemic, many are suggesting that grants are the best way to help.
That’s one of several insights gleaned from a new survey put together by the Whatcom Regional Economic Partnership, which is led by the Port of Bellingham. The survey was done in March through mid-April, touching on a variety of economic topics with 756 Whatcom businesses responding.
The desire for grants by businesses is a key indicator of what shape they were in heading into the pandemic. The survey noted many respondents were reluctant to apply for loans because they already were carrying a lot of debt.
“The need for relief and assistance is immense and it is critical to get direct cash transfers and grants to businesses in need as quickly as possible,” Port Director of Economic Development Don Goldberg said in a news release accompanying the report. “This report indicates loans for many small businesses may not be helpful because they are already carrying high debt loads. More tools need to be made available to different business types and operations such as sole proprietors, agriculture, fishing, and other industries that rely heavily upon contract workers.”
While not spelled out in the survey, there could be several reasons for the high debt load by companies heading into the pandemic: For retailers and restaurants the first couple of months of the year are generally slow in terms of sales, and some take that time to do remodeling or expansion projects. The beginning of 2020 was also a time of low-interest rates, so business loans were an attractive option.
The popularity of grants became clear when Washington state’s Department of Commerce began offering emergency grants to small businesses. The program was flooded with applications, to the point that it soon stopped accepting new applications earlier this month.
It’s also not uncommon for U.S. small businesses to carry a high amount of debt, said Jennifer Noveck, research and communications manager with the Regional Economic Partnership. The uncertainty of this pandemic’s impact on the economy, including not knowing when a business might resume “normal” operations, contributes to that reluctance to take on more debt, she said in an email.
Other key findings from the survey:
▪ 450 Whatcom County businesses estimated cumulative losses at over $28 million with the highest average loss per business in the recreation, public, tourism and restaurant and bar sectors. That $28 million estimate is based on the idea that business would be “back to normal” by May 15, something that is not likely to happen.
▪ 48% of the businesses that answered the survey said they were closed, although it was noted that this total is probably higher. Businesses that answered this question in mid-March might have closed in the following weeks. Others had severely cut back services, maintaining a smaller workforce and closing to the public.
▪ 26.6% said that their business had the ability to allow staff to work from home, while 53.6% said that their business did not have the ability to let staff work from home. The rest of the respondents, about 20%, said that some staff could work from home but not all.
The report noted that the survey results should be viewed as a way to gain some insights on what’s happening to the economy, but not be considered a scientific study. This particular survey faces some key challenges, including the dramatic fashion the pandemic has changed the local economy in such a short time. A business owner who answered the survey in mid-March may have different answers just a few weeks later, for example. The survey respondents were also not balanced in terms of geography or sector.
While the survey comes with caveats, it is still important to consider because it helps chart a path to recovery, said Whatcom County Executive Satpal Sidhu. He added that the report underscores the need to support these businesses so they can rehire people as soon as possible.
