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How small businesses are recovering from the COVID-19 downturn: Chamber of Commerce VP

U.S. Chamber of Commerce Vice President of Small Business Policy joins Yahoo Finance to discuss the recovery of U.S. small busineses during the COVID-19 pandemic.

Video Transcript

ADAM SHAPIRO: Joining us now is Tom Sullivan, Vice President of Small Business Policy at the US Chamber of Commerce. And Tom, it's good to have you here. What are you hearing from businesses that are members of the chamber, especially small business owners, about what they need next in this process of reopening the economy?

TOM SULLIVAN: Well, thank you Sean. Thank you, Adam. And thank you, Seana. We're hearing from small businesses that things are looking pretty good. Keep in mind, we represent 3 million businesses. About 96% of our membership have fewer than 100 employees. 75% of our membership have fewer than 10 employees, and that includes members of about 500 trade associations and between 1,600 and 2,000 local, state, and regional chambers of commerce.

When I say that things are looking pretty good and we're hearing positive things, I'm basing that on a quarterly index that we do with our partner MetLife. Our last small business index showed-- looking at my notes here, it showed an index level of 55.9. And that's actually up three points from the end of last year, which is very positive.

I think the pragmatic view of things, though, is that we've still got a long way to go to reach the index level of 71.7, which is what the index was pre-pandemic. So things are looking good, but we've still got a long way to go. And that's consistent with what I hear every day from small businesses.

SEANA SMITH: So Tom, when you mentioned that gap right there, I guess what's needed in order for small-- in order for us to get to that 70-plus level? Is it more assistance from the government? Is it something else? What's needed?

TOM SULLIVAN: So there's two parts to it, Seana, and thank you for that question. So the first part is the gratitude small business owners have for the federal aid. I mean, just this past week, the PPP exhausted its funding, except for a little bit that's left for community financial institutions. And over the course of 13 months, SBA helped loan money that will, hopefully, all be converted to grants to over 8 million small businesses.

So there's this enormous gratitude, and that gratitude continues to SBA running its Shuttered Venue Operator Grant program and the recently launched Restaurant Revitalization Fund grant program. So those targeted aid packages are still needed. But what we're starting to hear from small businesses is a desperate need to find qualified and willing employees. And in that sense, they're starting to tell Washington, DC, please don't make it harder for me to recover.

So for instance, there's a Protect Right to Organize Act that's passed the House of Representatives. Small businesses are telling us, don't penalize me for going out on my own and becoming a freelancer, which the Protect Right to Organize Act, the PRO Act, will do. And that PRO Act is embedded in the president's infrastructure plan.

So small businesses are saying, thank you for the aid, but now please, Washington, don't make it more difficult for me to recover. And we're hearing the same thing when it comes to tax rates. Small businesses want infrastructure improvements, but they-- 1.4 million small businesses that are organized as C corporations do not want a tax hike. They want to be able to get tax savings and reinvest that back into their small businesses so that they can grow their way out of a very difficult 13 to 15 months.

ADAM SHAPIRO: Tom, we just had a bunch of guests in our last hour telling us about the labor shortages they face today. And even the stuff you just mentioned, it's going to take months, if not longer, if it gets through in the debate. What could, if anything, the government do right now to help with the labor shortage?

TOM SULLIVAN: So a couple of things. There are a lot of federal aid initiatives that are just now hitting the street. I mentioned Shuttered Venue Operator Grant, Restaurant Revitalization Fund. Let's not forget that a good percentage of these 8 million small businesses that received PPP loans, they've got to convert those into grants through what's called forgiveness.

So the federal government should be immediately shifting into helping those small business owners figure it out with the least amount of paperwork, the least amount of hassle so that those small business owners can focus on what is becoming very, very clear-- it is not going to be easy to find qualified and willing employees.

We think that it's best for small business owners to be able to focus exclusively on that challenge ahead that will grow Main Street instead of looking in the rear view mirror and trying to do red tape and paperwork just to simply take advantage of a number of federal programs that are designed to help them. So we really are laser-focused at the US Chamber of Commerce to convince the Washington, DC, federal bureaucracy to make it as easy as possible for small businesses to grow. And we've seen some positive things, but we've got a ways to go.

SEANA SMITH: Tom, speaking of helping Main Street grow, what are you seeing just in terms of new businesses? Because we know many people obviously weren't starting businesses, some were, clearly, but on a larger scale, many people weren't during the pandemic. Has that started to pick up again?

TOM SULLIVAN: So Seana, again, two responses to that great question. So the first is tremendous news. So we see through data from the Census Bureau on likely new employer firms that we're actually already outpacing by a multiplier of three to five times the growth rate coming out of the last recession. So things look really, really good from a new startup perspective.

But again, small business owners are telling us and Washington, DC, like, don't kill the goose that's laying the golden egg. Passing the Protect to Right to Organize Act is actually going to penalize folks who are starting a new business and deciding to be a freelancer. We think that that is a step backwards, not a step forward. So we're-- we're fighting that type of approach with everything we got.

ADAM SHAPIRO: Very quickly as we start to wrap up, the other issue small businesses would face is supply. And I'm not talking labor supply-- materials. The big headline this week has been the shortage of chicken. Are you hearing from small business owners frustrations, whether it be increases in prices for things like PVC or that kind of issue with other input items?

TOM SULLIVAN: We are. So just yesterday, I spoke with a remarkable small business owner in Jackson, Mississippi. And he-- he issued a warning. He said, folks, get your ketchup, because as a restaurateur who buys things in bulk, he's already seeing a shortage of ketchup.

And here is a leader in a community that is actually-- he just opened a business, so this answers Seana's question, just opened a business two weeks ago. He just hosted a vaccine clinic in the parking lot of his bakery called Broad Street Bakery in Jackson, Mississippi. And so if he's concerned about something as really one of the leaders in the entire country when it comes to small business, then we should all be worried.

And his message to us in Washington, DC, was when you're looping businesses together, whether it's on tax rates or supply chain or employment challenges, make sure that you're sensitive to the unique positions of small business. Because in this case, when it comes to a federal reaction, one size does not fit all when it comes to a Main Street small business.