When will the cash and customers return?: Survey reveals Santa Rosa business fears about coronavirus restrictions

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Will Santa Rosa businesses have enough capital to reopen after the coronavirus lockdown?

Will customers return at pre-pandemic levels?

Those topped the list of concerns raised in Santa Rosa Metro Chamber’s second COVID-19 impact survey of regional businesses about returning to work.

The survey, which is continuing, was launched May 4 and released May 10.

Cash flow was the highest priority (56%) of the 100 respondents, followed by marketing and promotional assistance (43%), supply chain aid (6%), and assistance for laid off employees on how to obtain benefits (5%).

Asked if they had the resources to reopen today, about half said yes. But many were cautious about the future, adding caveats like if there are addition relief package or unless shutdowns and restrictions continue or if customers will want to come back and shop. Many said they worried how their business will accommodate social-distancing rules, like keeping a distance of 6 feet between people.

A large number of the businesses surveyed (79%) had applied for a Small Business Administration loan under the Paycheck Protection Program. Of this total, 83% said their applications were approved, and 66% said the loan they received matched the amount requested. As of the survey date, 56% had already received the payroll loans.

Going forward, more than 70% were concerned about duration of this program, and 80% believe they will have their payroll funds forgiven, which requires that they agree to rehire or retain 75% of employees who were furloughed.

The payroll loans came in two waves after the program was launched April 3. Half of the respondents asking for that relief found that their applications were not processed before the first round of funding ran out.

Of those businesses that applied for SBA economic injury disaster loans (EIDLs), an almost equal percentage (43.24%) had their applications approved, but only 21% said the loan received matched the amount requested.

As of the survey date, 41% had received EIDL funds. Barriers to obtaining EIDL included having difficulty in navigating the SBA’s online application portal (22%) or being unable to apply before the first round of EIDL funding ran out. Many have still not received official approval or funding.

Fewer businesses surveyed (28%) had applied for help from the state under the Employment Development Department's Pandemic Unemployment Assistance benefits, designed for independent contractors, sole proprietor or self-employed individual. For those that applied, 62% of their applications were approved, and 57% said they have received or will receive retroactive benefits. Some 44% are concerned about the duration of this program.

Barriers encountered with that program include difficulty in navigating the department’s online portal (34%), initial application denial but later acceptance (19%) and not qualifying at all (16%).

Respondents also applied for COVID-19 financial relief from these three other sources: SR Metro Chamber Small Business Emergency Grant (62%); Hello Alice Business for All Emergency Grant (22%), U.S. Chamber of Commerce Save Small Business Grant (22%).

State of California tax deferrals are another relief option. Sixty-seven percent of respondents took advantage of the 90-day extension for all businesses filing a return for less than $1 million in taxes, and 22% asked for the 60-day extension to file state payroll reports and/or to deposit state payroll taxes.

When asked if those with closed businesses plan to reopen, 47% said, “Yes, my business has the resources it needs to restart,” while 23% also said yes, “If my business secures relief or additional resources.”

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Almost 30% voiced a variety of answers to whether they could reopen today: “Today, yes, but if this goes on for months more, who knows” or, “it depends on what preventative measures we have to put in place first, and what restraints we have to deal with,” as well as “will consumers show up, will COVID spike again, and will employees come back to work?”

Only one responded, “My business doesn’t have the resources it needs.”

On reopening challenges, a majority (53%) said that they anticipated having difficulty in incorporating social-distancing practices into their operations, while 40% cited financial constraints — debt, untenable cost of the lease or mortgage, and inability to meet payroll.

Some 20% said they planned to rehire previous experienced staff, and 17% said they will be hiring and training new staff. An additional 44% presented other concerns.

For example, the new $2-per-hour minimum-wage increase coming in July “is going to further push us to the point where we may not be able to keep our theaters viable,” according to one survey comment. Another said, “Our business was about 50% from tourists. We do not foresee that (level) returning and will need to make up the difference from locals and online sales.”

There's fear “they would not be able to maintain their staff after PPP runs out,” per one response. Another didn't know if “folks will be willing to get out and shop in person, and in the volume need to sustain businesses, along with the ability to attract shoppers downtown again.”

Operating costs downtown are not being met by current cash flow, a commenter said, so if large downtown gatherings are not allowed, it would get worse from a fiscal perspective."

Some of those taking the survey listed business-continuity concerns, amounting to 66 issues. Among them were these: ”How can customers be made comfortable again after all the fears? Will people feel confident about coming back to restaurants, and will there be enough business at a reduced capacity limit to make it worthwhile to even reopen with sit-down services — or should we just stick to takeout?”

There was uncertainty about going forward if businesses are forced to close again, should the virus outbreak surge after reopening. There was also this dour outlook for the recovery: At best, it could take years before downtown can come back. One person mentioned an oft-mentioned comment about downtown business, that the area has been “overwhelmed with transients and the public is very aware.”

The inconsistency of re-opening safety practices is also seen as problematic, causing employee strain, emotional conflict, mental challenges and depression. This, some believe, could make it very hard to plan given an unknown future that could last for a year or two, while also exasperating employee uncertainty about their own future. While some employees have adapted to working remotely, the mental health of all employees is one of the biggest concerns.

Some feel that many people will become even more reliant on the “handouts of government, or others and not be self-starters.” A respondent questioned, “How long will we artificially destroy our economy?”

Seventy percent of those responding were Metro chamber members, 6% were part of the Young Professionals Network; 18% have businesses in the downtown district; and 22% were not affiliated with those three other groups. Each person was allowed to check all items that apply in each series, so totals often exceeded 100 in any survey cluster.

Elsewhere around the North Bay, Marin Economic Forum is not doing such a survey but working with its county on high-level recovery plan, according to Mike Blakeley, CEO. Surveys are being conducted by most chambers of commerce in Marin.

Napa Chamber has not done a survey.

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