How California businesses can get help to outlast coronavirus and keep their employees

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With business slowing because of the coronavirus outbreak, Shaun Cho said he had no choice but to cut his 10 employees’ hours at New World Cleaners in Sacramento.

He didn’t want to do it.

“Most of my employees, I’ve had for over 15 years. They’re like family to me,” Cho said. “But if I don’t stay afloat, they’re not going to have a job in a month or two when things get back to normal.”

Cho said that he’s seen a precipitous drop in business because of COVID-19. Machines that once ran six days a week now are running only three. He said his income is down 70% to 80%.

“It’s pretty bad right now,” he said.

More than three-quarters, 76%, of small businesses in America have been negatively affected by the spread of COVID-19, according to survey conducted by the National Federation of Independent Business.

“Of those businesses negatively impacted, 23% are experiencing supply chain disruptions, 54% slower sales, and 9% sick employees,” according to the federation.

There are resources available at both the state and federal level aimed at helping businesses struggling with the COVID-19 pandemic. Here’s a look at some of the assistance available to them, and some of the ways companies are trying to keep workers on their payroll.

Apply for a disaster loan

The Small Business Administration is offering special, low-interest economic disaster loans to California companies suffering losses because of the outbreak.

Businesses can obtain loans for up to $2 million and repay the money at a rate of 3.75%. Nonprofit organizations are eligible for a lower rate o 2.75%.

The money can be used for debt, payroll or other bills, according to the administration.

The California Governor’s Office of Business and Economic Development also maintains a Frequently Asked Questions page which points businesses to resources.

Those resources include the California Infrastructure and Economic Development Bank’s, or IBank, loan program, which offers a $1 million small business loan guarantee program, with micro-lending up to $10,000.

Avoiding layoffs

At a time like this, many businesses might be tempted to make “a clean break” by laying off staff, said Daniela Urban of the Sacramento-based Center for Workers’ Rights. That would be a mistake, she said.

“Once you terminate a worker, it’s really hard to go back,” Urban said.

Tens of thousands of Californians are filing for unemployment insurance each day, due to either being laid off or because of reduced hours. Hundreds of thousands of private sector jobs could be lost by summer, according to the Economic Policy Institute.

Where possible, Urban urged employers to consider offering employees who can’t work additional paid sick days or accrued or future vacation benefits.

Failing that, she said employers should try to at least keep their employees on unpaid leave in lieu of laying them off, saying that it will be easier to re-staff once the COVID-19 pandemic subsides.

Urban said it’s critical that workers be able to hold on to their work-provided health insurance benefits.

“Especially right now, we don’t want workers having to switch health care providers in the middle of a pandemic,” she said.

Use partial unemployment

California employers who need to cut hours to save money can also avail themselves of the state’s Unemployment Insurance Work Sharing Program.

This program, from the Employment Development Department, allows employees to receive unemployment benefits while keeping their job at reduced hours, and is intended to help employers avert the need for layoffs.

Watch for more help

More help could be on the way. Los Angeles and San Francisco have suspended evictions of small- and medium-sized businesses for at least 30 days, giving companies time to sort out their finances.

State lawmakers have submitted similar proposals, although the Legislature is out of session because of the outbreak. Sen. Scott Wiener, D-San Francisco, and Assemblywoman Lorena Gonzalez, D-San Diego, are carrying bills that would halt commercial evictions.

Congress is moving on a third coronavirus aid bill. It has not passed, but it’s expected to include more funds to support small businesses.

Calling suppliers and creditors

Creditors will be vital for small businesses looking to weather the COVID-19 pandemic.

The Center for Regional Economics and California Center recommends that employers use available lines of credit in order to avoid cash flow problems that may arise due to further disruption in the lending environment.

The center further recommends that employers keep open lines of communication with both creditors and suppliers “to increase flexibility and provide more opportunities for adjustment.

Back at the dry cleaner

Drew Lewis, an employment attorney based in Roseville, said that a lot of companies are having to scramble to figure out what to do with their employees.

“The dust is in the air, nothing is settled yet,” he said.

Many white collar companies have been able to transition employees to working remotely, Lewis said, but other companies are faced with the question of what to do with their employees.

Three of Cho’s full-time workers now are on part-time schedules. He said that he might seek out assistance to help his business stay afloat. His expenses aren’t going away any time soon.

“My landlord says, ‘Pay on time.’” Cho said. “They’ve got to pay their bills, too.”

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