Small Businesses’ Access to Cash Questioned on New Jersey Panel
Whether New Jersey’s small business community has the necessary cash to recover from the COVID-19 pandemic was questioned on a virtual panel at the end of April. Hosts Steve Adubato, anchor of the “State of Affairs" television show on PBS, and Tom Bergeron, editor, founder and owner of ROI-NJ, asked a series of questions on New Jersey’s post-pandemic economic recovery to New Jersey Assemblywoman Eliana Pintor Marin (D-29), Assembly budget chair; Senator Steven Oroho (R-24), Republican budget officer and member of the NJCPA; and John Harmon, founder, president and CEO of the African American Chamber of Commerce.
Access to cash is a key component of most businesses’ ability to recover from downturns, such as the fallout from COVID-19, but small businesses, in particular, need financial support. “It will take much longer for small businesses to come back,” said Pintor Marin, noting businesses in New Jersey collectively have limited resources. Some positive development is occurring in certain sections of Newark, she added, but more work needs to be done to get businesses back on track.
Senator Oroho acknowledged that the New Jersey Legislature worked in a bipartisan fashion to assist small businesses during the pandemic. “On a bipartisan basis, the Legislature put a significant amount of money on the Governor’s desk to help small businesses — all kinds of small businesses. Unfortunately, it got vetoed and, quite frankly, it was months and months and months late,” he explained. “Unfortunately, nearly a third of our businesses have gone out of business and may never return. Let’s face it, cash in any business or liquidity, is king.”
Harmon added that growth can be a huge challenge for one- or two-person small businesses, especially those owned by Black Americans. “There’s over 80,000 Black businesses in New Jersey, and 93 percent of them are sole proprietorships,” said Harmon. Access to capital, he said, is not moving at the same pace for these business owners, which creates fewer business opportunities.
So, how should small businesses be prioritized when it comes to accessing cash? By following the data, according to Harmon. If Black Americans on average have the highest unemployment rate, the highest poverty rate, the lowest median income and homeownership is in the 30 percent range, he explained, “it tells you that there should be some priority there.” He added, “I believe that we should not only put money behind this, but we need opportunity.”
Corporations, Harmon added, have engaged with local small businesses in the private sector during the pandemic, but he does not believe enough has been done in the public sector. “How do we make seismic, transformational change? That hasn’t happened,” he said. “We have all of these resources. Let’s get them in the hands of folks, coupled with opportunity, so they can sustain themselves.”
Other issues also put a damper on small businesses’ ability to receive cash infusions during the pandemic. According to Pintor Marin, a lot of minority-owned small businesses faced a tremendous amount of paperwork in obtaining relief funds, and they could not wait the required number of days to receive it. Most business owners said, “I don’t have that kind of capital,” or “I can’t expand my business because my employees are not going to get paid,” she acknowledged. Without a larger capital boost, they are not going to be able to move forward, she said.
Senator Oroho noted small businesses would have been better off if more cash were given out to them sooner instead of the state government holding onto the cash as a hedge. He said, “they made the government the priority with keeping the cash. If we had gotten that cash on the street quicker…we may not have had a decline at all.” New Jersey borrowed over $4 billion to cover operating costs due to the impact of the COVID-19 pandemic.
But as Pintor Marin points out, the state did not know what was going to happen in the midst of the pandemic. “You had unemployment rates we haven’t seen since the Great Recession. We saw businesses having to be shut down. We saw a complete halt. We saw hospitals that had trucks of freezers. At that moment, you are planning a budget and want a healthy surplus, just like your household. It’s the same thing with the state.”