Bernie Marcus’ diagnosis is that the economic heart of America, its small businesses, have been severely damaged by COVID-19. His prescription includes applying a dose of caution before flinging open doors that were forced closed by the coronavirus threat.
“Many medium and small businesses are not going to be able to reopen. If they do, they will not have the cash flow to sustain. I believe the percentage will be as much as 20 percent,” Marcus told the AJT. “I hope I am not being overly pessimistic. All indications are that I am not. I do have a strong opinion that we should not open businesses until we have some semblance of coronavirus control, and enough tests available to see who is asymptomatically carrying it.”
Marcus has backed efforts to shore up the finances of small business owners so that, when they resume operations, they retain their most valuable asset: the people who work for them.
To that end Marcus, the co-founder of The Home Depot, and the Job Creators Network that he founded in 2011, played a role in crafting the $349 billion Payroll Protection Program included in the $2.2 trillion COVID-19 stimulus bill passed by Congress and signed into law in late March.
The PPP money was allocated so quickly that Congress passed and President Donald Trump signed a second stimulus package, this one for $484 billion, including $310 billion more earmarked for small business.
Dana Neiger is co-owner of HIVE Talent Acquisition Firm, a three-year-old Atlanta business that assists job-seekers and companies looking to hire, helps young people doing internships find full-time employment, and provides human resources consulting for small- or medium-sized businesses that may not have an in-house human resources department.
HIVE was ready to move into newly leased and customized office space when COVID-19 put a crimp in those plans. Neiger applied for aid through the PPP but was not among the recipients. HIVE has eight employees – two of whom have been furloughed. “I had to furlough people because I did not get the money,” Neiger said.
HIVE has reapplied, hoping to receive PPP assistance in the second round of funding and rehire the two furloughed employees. “We are trying to do right by our people,” said Neiger, a member of Temple Emanu-El.
Temple Kehillat Chaim in Roswell was successful in its PPP application, which meant that it able to keep its paid staff, which number five and a-half positions. “We were determined not to lay anyone off,” said a relieved congregation president Alan Abrams.
In the meantime, Marcus foresees difficult decisions ahead. “I think every business owner has to define for themselves what provisions to put into operation to protect their employees and their customers. A major drawback is if they open too soon, the trial lawyers are ready to pounce. There is no liability protection given by the government for small businesses to take that risk,” Marcus said. “I think that every business owner over the last month has been thinking of a date to open. They have to weigh the consequences, negative and positive. There is risk involved no matter which way they go. People are anxious to get back to work. But a resurgence is potentially out there. Each member of the business community has to make a judgment decision.”
Marcus is a steadfast cheerleader for that segment of the economy. “I want to remind everyone how critically important small businesses are. Half of the businesses and half of the jobs are related to small businesses. You can understand how this impacts the economy,” he said.
According to a tax filing, the mission of the Job Creators Network, a nonprofit under the federal tax code, is to “educate Americans on the vital role of free enterprise in creating jobs that will spur innovation and help ensure America’s future economic success.”
During the past several weeks, Marcus has reminded interviewers that there are some 30 million small businesses in the country, employing 60 million to 70 million people. Appearing April 6 on Fox Business, Marcus said, yes, you have to worry about the airline industry and the airplane manufacturing business, but “if we don’t have the small businesses, we have no economy in the United States.”
When the U.S. House of Representatives issued its version of what became the Coronavirus Aid, Relief, and Economic Security Act, Marcus thought it paid insufficient attention to the needs of small business and engaged with JCN to fix what he saw as a shortcoming.
“JCN played a role in the CARES package, especially the Paycheck Protection Program and advised Mnuchin, Rubio, Collins, and McConnell,” Marcus told the AJT, referring to Treasury Secretary Steven Mnuchin; Sen. Marco Rubio, R-Fla.; Sen. Susan Collin, R-Me., and Senate Majority Leader Mitch McConnell, R-Ky. Rubio and Collins were among the Republican senators who developed the plan. “We continue to represent small businesses to try to get as much help for them as possible. This is important.”
Beyond his prominence as a businessman and philanthropist, Marcus has been a major contributor to conservative causes, including Trump’s 2016 presidential campaign. His relationship with the president is such that Trump last year recorded an effusive birthday greeting from aboard Air Force One that was played at Marcus’ 90th birthday party at the Georgia Aquarium.
The CARES Act defined a small business as one that employs fewer than 500 employees at a single location. The loans were available also to partnerships, nonprofits, sole proprietors, independent contractors, and so-called “gig workers.”
Eligible businesses could borrow up to 2 1/2 times their payroll, to a maximum of $10 million, with the funds designated to cover eight weeks of payroll, as well as rent, utilities and mortgage interest. Compensation beyond an annual salary of $100,000 was excluded.
The 1 percent loans, guaranteed by the Small Business Administration, come due in two years but will be forgiven if the borrower meets criteria that include spending 75 percent of the funds on payroll during the two-month period.
According to the SBA, as of April 16, 4,975 lenders had made more than 1.66 million loans, totaling nearly $342.3 billion, with the average loan being $206,000.
The SBA broke down the loan amounts awarded: 74 percent were for less than $150,000; 13.4 percent were $150,000 to $350,000; 8.4 percent were $350,000 to $1 million; 2.4 percent were $1 million to $2 million; 1.3 percent were $2 million-$5 million; and 0.27 percent were more than $5 million.
The industries receiving the largest shares of the money were: construction, 13.1 percent; professional, scientific, and technical services, 12.6 percent; manufacturing, 11.9 percent; health care and social assistance, 11.6 percent; and accommodation and food service, 8.9 percent.
In Georgia, 48,332 loan applications were approved, totaling nearly $9.5 billion, according to the SBA.
Not all of the money has reached the recipients yet.
Even with the anticipated loss of small businesses that do not recover from COVID-19, Marcus retains a measure of optimism. “We should all be concerned and want to see the economy back to where it was before and people fully employed. I believe if every precaution is taken, if we find a way to do it, it will be like the sunrise, slow at first, but leading to a brighter day. This is critical to all Americans,” he told the AJT.
[Note: Marcus is the father of AJT publisher Michael Morris.]