Continued COVID Crisis Causes Increase in Closure of Small Businesses

By: Kathryn Olon

As Pennsylvania enters its seventh month of COVID-19 precautionary measures, many of the small businesses that call the greater Pittsburgh-area home have closed their doors permanently due to lack of business.   According to a report published by Yelp in August, more than 129 Pittsburgh restaurants have permanently closed since the start of the pandemic.  This number has only increased over the past month, as the Pennsylvania Liquor Control Board cracks down on COVID-19 violations.

Between March 1 and July 10, the Pittsburgh area saw 739 businesses close their doors.  Of these businesses, restaurants and the retail industry made up the largest fraction, with 46 permanent closures occurring since the pandemic began.

These closures are not limited to the Pittsburgh area.  Nationally, restaurants have experienced 26,160 restaurant closures since July 10.  Of these closures, 60% of these closures were permanent.  The shopping and retail industry also experienced drastic closures, with 26,119 businesses closing their doors, 48% permanently.

Why this sudden increase in business closures?  Between the Center for Disease Control and Prevention’s social distancing measures and Governor Wolf’s “Stay at Home” Order, people are going out less and staying in more.  Unsurprisingly, this sudden decrease in customers has had a detrimental effect on small businesses, both in the Pittsburgh area and nationally.

Businesses on the brink of closure may wonder what options are available to them to stay in business.  The Small Business Administration (SBA) provides small businesses with information about COVID-19 resources and guidance.  This includes details about the Economic Injury Disaster Loan (EIDL).  The EIDL is a long-term direct loan program from the SBA designed to help small businesses meet financial obligations and operating expenses that these businesses could have met if the disaster had not occurred.  This includes a loan of up to six months of working capital for eligible businesses.  To be eligible for COVID-19 EIDL, the applicant must be physically located in the United States and have suffered economic losses due to the coronavirus pandemic.   Eligible businesses include businesses with 500 or fewer employees, cooperatives with 500 or fewer employees, agricultural enterprises with 500 or fewer employees, private nonprofit organizations, faith-based organizations, and sole proprietorships and independent contractors.

Another option for these businesses is assistance from the Commonwealth, the COVID-19 Working Capital Access Program (CWCA Program).  This program provides businesses with critical working capital finances to help cover adverse effects due to the coronavirus pandemic.  Eligible businesses include for-profit corporations, limited liability companies, partnerships, proprietorships, or other legal business entities located in the Commonwealth of Pennsylvania.  To be eligible, a business must have 100 or fewer full-time employees at the time of application submission. The largest loan that a business may receive under the CWCA Program is $100,000.

Additionally, the Pennsylvania Department of Community and Economic Development (DCED) offers working capital loans to assist businesses that have been affected by the coronavirus pandemic.  The DCED website has an ongoing list of resources and information available which is updated as additional resources are available. Though COVID-19 has caused many businesses to close their doors permanently, struggling businesses are not entirely out of luck.  There are several resources available for these businesses that may help them get the assistance they need as the coronavirus pandemic continues.

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