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Business groups, state and federal programs try to help N.J’s small businesses stay afloat

One suggestion is that small businesses be given more time to turn over the sales-tax revenue they collect for the state. (NJTV News)

One suggestion is that small businesses be given more time to turn over the sales-tax revenue they collect for the state. (NJTV News)

This article originally appeared on NJ Spotlight.

The month of March started out fairly normal for Caruso Physical Therapy and Nutrition, LLC in Allentown, Monmouth County, but by the middle of the month, things took a major turn.

Cancellations soared amid concerns about the ongoing coronavirus outbreak, and as Gov. Phil Murphy began urging people to stay home to prevent further spread of the disease, said business owner Olivia Caruso.

Fast forward a few more weeks, and Caruso said she is now concerned about the viability of her 10-employee business, even as it has remained open, unlike many other small businesses deemed “nonessential” by the governor that have been forced to close altogether under a social-distancing executive order Murphy issued last month.

The current situation is “very scary,” said Caruso, a mother of two who is also caring for her husband as he fights brain cancer.

A huge role in state’s economy

While small businesses don’t always receive the same attention — or significant tax breaks — that often goes to large corporations, they play a huge role in the New Jersey economy, employing some 50% of those employed throughout the state during normal times.

But the coronavirus pandemic and the ongoing government response to it has made things anything but normal for the thousands of small-business owners like Caruso who are now fighting for their survival.

“We’re not bringing in enough to pay the bills,” she said in an interview this week with NJ Spotlight.

New unemployment figures the state released on Thursday shed some light on the scope of the economic damage being caused by the pandemic. A total of 206,253 new benefits claims were filed last week, according to the new unemployment data, topping the record for new claims that New Jersey set the prior week. Industries like food services and some health services like dentists’ offices, which are generally run as small businesses, were hit particularly hard.

What defines a small business is a subject of some debate, and it can vary from industry to industry. Federal data suggests small businesses with 100 or fewer employees account for the largest share of small-business employment in the U.S., but some federal programs also allow businesses with 250 or more employees to qualify as small businesses, depending on the industry.

Across the nation, new research released on Thursday by the National Federation of Independent Business (NFIB) found that 92% of the group’s members surveyed earlier in the week reported being negatively impacted by the coronavirus outbreak, with 80% of that group reporting slowed sales.

Eileen Kean, state director in New Jersey for the NFIB, said this comes as business owners already face challenges caused by the general high cost of doing business in New Jersey.

‘Struggle to survive’

“Now business owners who have spent decades building their companies face an uncertain future as they struggle to survive,” Kean said.

While federal and state lawmakers have tried to meet the new demand for unemployment benefits by boosting funding and expanding existing programs, there is also a big concern about maintaining the profitability of small businesses so that laid-off workers, including those in New Jersey, still have a job to return to when the outbreak begins to ease.

The state and federal governments have rushed out several new programs in recent weeks in response, and they’ve also found new sources of funding to support things like grants and loans, all in an effort to backstop small businesses. But it remains to be seen whether what’s been created amid the emergency will be able to fully meet the growing demand for help.

At the federal level, a number of new or expanded programs were established with small businesses in mind in the $2 trillion legislative package enacted by the Congress and President Donald Trump last week.

Forgivable loans for payroll, mortgages, rent

Among the federal offerings is a forgivable loan program that provides qualified small businesses with up to $10 million each to help cover things like payroll, including salaries and paid time off, according to Ray Cantor, vice president of government affairs at the New Jersey Business & Industry Association (NJBIA). The funding is also available for things like mortgage or rent payments, he said.

And the application process — which can be started by going to the federal Small Business Administration website — has also been streamlined to make it easier on small-business owners.

“The money should be (going) out quickly,” Cantor said.

Meanwhile, the federal government has also expanded the pool of people who can qualify for unemployment benefits to include small proprietors and independent contractors. It’s also making available tax credits for businesses to reward employee retention and changing other tax rules to help get businesses through these difficult times.

But Cantor said the new programs should be considered a stopgap, suggesting there will be many more needs that will eventually have to be reckoned with.

“There’s still a whole bunch of gaps in this,” he said.

EDA helps stabilize small business

At the state level, the New Jersey Economic Development Authority (NJEDA) just launched several new programs and expanded others to help small businesses after state lawmakers rushed out their own economic-relief package last month.

One of those programs is making grants worth up to $5,000 available to help stabilize small businesses and hopefully prevent them from having to let go of or furlough workers. Another new program is providing loans for working capital worth up to $100,000, starting with no interest for the first five years. Among other loan programs is one that’s directed at helping entrepreneurs get through the emergency.

The EDA has also created an online information hub and “eligibility wizard” to help link business owners with the benefits they may now qualify for. The window for accepting applications for the EDA’s Small Business Emergency Assistance Grant Program was just opened up on Friday morning.

“Small- and medium-sized enterprises are the heartbeat of New Jersey’s economy, and it is crucial that we do what we can to provide the resources and assistance they need to withstand the outbreak of novel coronavirus,” said Tim Sullivan, the EDA’s chief executive officer, as the programs were rolled out last week.

Chris Emigholz, vice president of government affairs at the NJBIA, called the state’s efforts “a good start,” and he credited Sullivan and other officials at the EDA for launching the new offerings so quickly.

“They put the money they had in-house on the street as soon as possible,” Emigholz said.

Putting pressure on state finances

But he also suggested more resources will be needed to help the state’s small businesses. It’s possible that more funding will be made available out of the state budget to backstop what is initially being provided by the EDA. However, just as the coronavirus has strained the business community, it’s also putting pressure on the state’s own finances as some tax sources have slowed to a trickle.

Something as simple as giving small businesses more time to turn over the sales-tax revenue they collect for the state, or at least waive penalties for paying late, may be helpful for small businesses, Emigholz said.

That recommendation and several other small-business aid proposals were included in a letter that 40 business groups, including the NJBIA, sent to Murphy and lawmakers on Thursday.

And while statewide groups like the NJBIA and the New Jersey Chamber of Commerce — which is now putting out a daily update on issues related to the coronavirus and offering other enhanced services to members — are mobilizing to help small businesses, in some places in New Jersey, local officials have also begun their own efforts.

For example, city officials in Newark have just launched a program working with the United Way of Essex County to help local businesses with 10 or fewer employees by providing them with grants worth up to $10,000 to cover things like payroll, rent, taxes and inventory. (More information about the program is available at https://uwnewark.org.)

“We can’t stand by and wait for help from other sources,” said Mayor Ras Baraka as the new program was announced last week. “Here in Newark, we must solve our own problems.”

Some efforts to support small businesses have also been launched at the grassroots level, including in Westfield, where residents are using the Westfield United Fund to provide some help to the town’s independent businesses.

First Lady’s relief efforts

A nonprofit Pandemic Relief Fund has also been launched by First Lady Tammy Murphy to help raise money for those who are being hit the hardest by the pandemic, and among those who may receive assistance through that effort will be “low- to-middle-income residents and New Jersey’s small business community,” Tammy Murphy said in a news release announcing the establishment of the new fund-raising effort.

“We are committed to the task of identifying the most effective interventions, determining community needs, and raising essential funds and awareness as we battle this challenge,” she said.

Still, despite these efforts and others, circumstances for many small businesses remain extremely difficult, as they are for Caruso, the owner of the Monmouth County small business. And Number 1 on her wish list right now, she said, is some help managing the finances.

“To help us with what we have lost, only because of the virus,” she said. “If they could just help us stay afloat through these weeks.”

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