The necessary social distancing and “stay at home” precautions has “flattened the curve” and saved countless lives. The unfortunate side effect; however, has also been a massive slowdown in the economy. The U.S. Chamber of Commerce reports an estimated 12.4% drop in GDP for second quarter. That could work out to well over a two and a half trillion dollar national loss.
Small businesses all are taking this hit especially hard. Hair salons, restaurants, antique stores, and many other “mom and pop” shops are effectively out of business, their owners struggling to support their families. According to the SBA, small businesses employees almost half of those working in the private sector; truly the backbone of our economy and are unfortunately the first businesses to suffer when times get hard.
One would think that having a president who campaigned on and has built his personal brand on being a strong businessman would have the wherewithal to captain industries through these difficult times. Unfortunately, that has not been the case. The implementation of the Paycheck Protection Program Loan has been a disaster. From the beginning, the national need was grossly underestimated and miscalculated. On the first day the program opened, banks were not given sufficient information to actually process and issue loans. The guidelines changed right up to the last hour, with changing interest rates from 4% to 0.5% then to 1%. Additionally, many false and conflicting claims were made by the administration which exasperated the problem.
In North Carolina, only about 4.3% of firms classified as small businesses actually got funding during the first round, meaning over 873,000 small businesses in the state were left high and dry not knowing how they are going to pay their employees or provide for their families. In other words, this administration’s poor handling of the economic impact of COVID-19 has hurt 1.7 million North Carolina jobs.
Also, national publicly traded companies somehow qualified as a small business and were able to get millions in government funds when restaurants in Raleigh, photographers in Charlotte, and breweries in places like Wilmington, just to list a few, went unfunded on the first round.
Quantum, a tech firm, for example received a $10 million loan from the Paycheck Protection Program, despite being partly owned by a $500 million investment firm, reporting more than $400 million in sales last year, while local businessmen like David Makepeace went unfinanced. David is the owner of Medlin-Davis Cleaners in the Triangle who was forced to lay off two-thirds of his staff due to COVID-19. The colossal mismanagement of this program has hurt many individuals and families all over North Carolina and the United States.
It would have been helpful to many North Carolina businesses if President Trump, who claims to be a “successful business man,” and his administration had the foresight and management skills to petition Congress and rally the banking sector, and to develop an emergency small business funding program that they could have effectively implemented.
Unfortunately, this was not the case; the president affirms that the Paycheck Protection Program has been “successful” but that cannot be true with 95% of businesses going unfunded. This level of incompetence cannot be rewarded with a second term. North Carolina Business owners should remember the Trump administration’s poor performance in November.
Nathan A. Click is the founder and CEO of Pearl Financing LLC, a financing company which caters to small and medium sized business and real estate investors. He is a former U.S. Air Force officer and a founding member of the N.C. Centrist Coalition, the North Carolina State Leader for Stand Up Republic, and a member of the Institute’s Leadership Counsel.
