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Theory to Practice: COVID-19 Small Business Assistance Programs Are Ending, But the Pandemic Isn’t

Theory to Practice is an occasional blog series that explores the intersection of economic development research and current issues of debate within the practitioner community. In this post, Jamie McCall (Vice President of Policy and Research) and Evelyn Chen (Research Associate Intern) look at the continuing need to help Main Street North Carolina businesses survive and thrive through the COVID-19 pandemic.

The New York Times recently chronicled how small businesses (including Charlotte’s Southern Blossom Florist) are still struggling to survive amidst the economic fallout of the pandemic. COVID-19 has brought unprecedented devastation to Main Street. And in the past 6 months, numerous programs have been launched at the state, federal, and local level to help small businesses survive. But the need for aid is vast, and it seems what entrepreneurs have available to them is mostly determined by where they live.

Of course, that kind of development policy response is not unusual. In a federalist system, states and local governments are the primary actors in providing small business assistance of all types. But the pandemic itself is unusual, and as we have previously noted it requires policy actors to think outside the box.

Government Assistance for North Carolina Entrepreneurs

When the CARES Act was passed in late March, it represented an unusual and innovative approach to small business relief. The Act created the Paycheck Protection Program, which provided forgivable loans for small businesses. The Act also improved the Emergency Injury Disaster Loan, an existing SBA program, to include forgivable loan advances. But the PPP has expired, and overwhelming demand for the EIDL meant few small business owners were able to access its enhanced features. What assistance remains available is mostly from state and local governments.

It is difficult to give a precise overview of all North Carolina state and local programs that are trying to help small businesses. Many of the programs are open for short periods of time before applications (and their websites) go offline. To our knowledge, there is no comprehensive resource showing what is available to the entrepreneurial community. We conducted a search of programs being offered in North Carolina to see what is or has been available to Main Street businesses. Though this is not a comprehensive list, we think it helps highlight some of the issues we’re seeing with current policy responses.

North Carolina’s state government has supported two small business assistance programs, and a sundry array of public and public-private entities have their own local programs. But requirements to qualify for assistance can vary widely, and can include:

  • Industry Restrictions: Assistance is only available to selected industries.

  • Location Restrictions: Primary place of business must be within a certain area (this applies to all programs except the two available statewide).

  • Economic Distress: Demonstration of financial need for aid, usually though revenue declines over a certain time period.

  • Employment Caps: To qualify, the firm’s total number of employees must be within a range or below a certain level.

  • Employment Retention: Applicant must agree retain a percentage of their pre-COVID payroll employees.

  • Minimum Firm Age: Must be in operations for a certain period of time, and usually must also show the firm was profitable for a certain period of time.

  • No Benefits Duplication: Firm cannot have received aid from a similar program (or must agree to repay proceeds if aid from a similar program is later received).

  • Low/Moderate Income: Owner(s) be below a certain personal income threshold. This usually indicates the funding source is from the Community Development Block Grant program.

  • Revenue Cap: Must show the small business’s gross revenues are within a range or below a certain level.

The below tables highlight the programs we’ve found being offered by North Carolina’s public sector (or quasi-public sector, in some cases). Requirements vary widely, even for programs of the same amount and type. For example, grant programs in one city may have a restriction on benefits duplication but grants for similar amounts offered by another city may not. Note that the status of the program as open or closed is current as of 9/21/2020:



Need for More Comprehensive Responses

The policy responses we have observed in North Carolina are reflective of a broader national trend. Generally speaking, COVID-19 responses by state and local governments have been highly variable. What has emerged is a patchwork quilt which is insufficient for long-term recovery. Its hard to quantify the level of need right now, but all signs point toward overwhelming demand for more aid. More than half of small business owners say their business will not survive, which will have enduring effects on North Carolina’s economy. And as with most economic contractions, those businesses that will be hit the hardest tend to come from underserved communities.

For North Carolina so much of the state has limited access to help – especially rural areas. Some of that is simply a matter of local government capacity. Urban areas have more capacity for these types of interventions. As the pandemic continues, we believe this demonstrates the need for a more unified policy response at the state and national level. Even for entrepreneurs in areas that have a diversity of aid types available, many programs are closed or are closing. Requirements vary widely, even for similar amounts of aid. Being able to get help to survive COVID-19 should not be dependent on where a small business is located.

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