At an informational hearing held by the Select Committee on Small Business and Entrepreneurship, legislators, economists, advocates and small business owners discussed the state of recovery for small businesses. As California emerges from the COVID-19 Pandemic, these experts highlighted critical challenges facing the small business community and offered specific policy solutions for this committee to explore.
“Small businesses are the backbone of the California economy and the heart and soul of our communities,” said Chairwoman of the Select Committee on Small Business and Entrepreneurship, Assemblywoman Cottie Petrie-Norris (D-Laguna Beach). “From inventory and labor shortages to looming rent deferment payments, small businesses have an uphill battle to recovery. Today’s discussion was the first of many hearings planned for this year, and I look forward to diving deeper into the challenges that preceded the pandemic and have been exacerbated by it so we can fund programs that are proven to work and get the necessary resources directly to business owners.”
The COVID-19 pandemic has been devastating for small businesses and their employees all across our state. As of March 2021, 35.9% of California’s small businesses were still shut down. Recent surveys on small and medium sized businesses have found that 55% businesses believed that the economic impacts of the Pandemic will last over a year; 29% percent responded that these impacts would last for three years.
Dramatic declines in spending, inflation of services and goods, looming UI debt taxes, inventory and labor shortages, access to capital and the digital divide are just several issues small businesses are facing on their pathway to recovery. The Legislative Analyst’s Office shared that income dropped 20% at the beginning of the pandemic for businesses which is a stark contrast to the 5% drop seen after the 2008 Recession.
In strategizing small business recovery, panelists discussed what is working and what they are asking of legislators. They expressed support for the California COVID-19 Relief Grant Program, Career Technical Education programs, and additional funding for technical assistance providers. Suggested courses of action included expanding access to capital—especially for minority and women owned businesses, rationalizing regulatory hurdles that burden small businesses, supporting technical assistance providers to help bring small businesses online and providing funding for local communities to execute loan programs.
WHAT OTHERS ARE SAYING
“Small Businesses are vital to our economy. As we continue to recover from the pandemic induced recession, the Governor and Legislature have worked together to build a budget that is full of the right stuff for the state’s small businesses. From recovery grants, to workforce development dollars, to low cost capital, my office will have the right tools and resources to help our small businesses come back even stronger than before,” said Tara Lynn Gray, Director, Office of the Small Business Advocate.
“As today’s hearing emphasized, small businesses, particularly diverse-led businesses, need policies that will help ensure an equitable and resilient recovery from COVID-19,” said Bianca Blomquist, Senior Policy and Engagement Manager, Small Business Majority. “California has consistently taken decisive action to invest in short-term small business aid, but more must be done to support small businesses on their road to recovery. This is why investments included in the budget for the California Small Business COVID-19 Relief Grant and the California Rebuilding Fund are urgently needed.”
“Small businesses in California were hit hard in the pandemic with losses of 26 percent in business activity in April 2020 and losses of 15 percent in taxable sales in the second quarter of 2020,” said Dr. Fairlie, Professor of Economics, UC Santa Cruz.
“We are thankful for Assemblywoman Cottie Petrie-Norris and the Select Committee on Small Business for their continued effort to find solutions to assist California small businesses. The work being done in this committee will help to save hundreds of thousands of small businesses throughout the state of California,” said Mike Daniel, Regional Director, Orange County Inland Empire SBDC.
“We recommend that any government program that pays an employee more to stay home than to return to work be ended and not extended. Instead, focus on programs that assist employers having difficulty recovering from a year of business closures. Also, family businesses need relief from the tremendous regulatory burden that grows every year. And finally, more CTE funding will help employees gain skills to get better paying jobs,” said Robert Rivinius, Executive Director, Family Business Association of California.
“Mom and pop shops, neighborhood restaurants, and local service providers took a huge hit during the pandemic. The Legislature has worked with the Governor to expand the small business grant program to $4 billion and provide $6.2 billion in small business tax relief in addition to issuing license renewal fee waivers, easing tax burdens for start-ups, and leveraging tax credits to create full-time jobs that protect workers and keep businesses secure amid COVID-19 recovery efforts. Now it’s time for us to roll up our sleeves to deliver more of what they need to get back on their feet,” said Assemblymember Wendy Carrillo (D-Los Angeles). “Our communities are held together by for-profit and nonprofit providers of information, experiences, goods, and services. They shape the character of our neighborhoods, sustain the culture of our communities, and their diversity, innovation, and entrepreneurial spirit, are what create opportunities for Californians to thrive and achieve the American Dream. They are interwoven in the fabric of our state’s plans to build back boldly, and indispensable to the wellbeing of our Golden State,” she added.
“As a small business owner, I am excited to participate on the Assembly Select Committee on Small Business and Entrepreneurship,” said Assemblywoman Megan Dahle (R-Bieber). “The COVID-19 pandemic has wreaked havoc on our small business community and it is imperative the Legislature prioritizes streamlining regulation and providing assistance to help our economy reopen. Small businesses are the backbone of California’s economy and employment sector, and they need our support now more than ever.”
The full hearing can be viewed on the Assembly website.