Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of the Commerce, joins Yahoo Finance's Kristin Myers to break down the latest on stimulus negotiations, and the Chamber's Q4 Small Business Index.
KRISTIN MYERS: Congressional leaders are mulling over a deal that would include aid to small businesses as the virus continues to surge around the country, and it's needed now more than ever. A new report from the US Chamber of Commerce says that without any aid, 2/3 of small businesses will close.
I want to bring on Tom Sullivan now. He's the Vice President of Small Business Policy at the US Chamber of Commerce. Tom, always great chatting with you. Wish it was about a better topic, something a little bit more optimistic, but I want to start here. How has the lack of aid over these last few months really impacted small businesses?
TOM SULLIVAN: Well, Kristin, it's been devastating. I mean, we know that Main Street is hurting out there, but at the beginning of the coronavirus pandemic when Congress passed the CARES Act and created a whole new lending program, that was intended to get small businesses through three months. It's now nine months later.
And so the survey that we just got back in conjunction with our partner MetLife shows that the concern of businesses-- the concern of businesses to survive is at a crisis point. And if Congress doesn't act, we're going to see just a wholesale destruction of Main Street small businesses, especially those in the service and restaurant, hotelier, any type of business that relies on the face-to-face interaction with its customers.
KRISTIN MYERS: So let's really connect the dots here for everyone at home about how necessary this help is. If aid doesn't come or doesn't come soon and we see a lot of these small businesses start to close-- I know we've already seen many small businesses close. What is the knock-on effect to the economy? How is this going to impact, you know, the everyday, average person that doesn't have a small business and is wondering, you know, why should I actually care about that mom-and-pop store on the corner?
TOM SULLIVAN: Well, you see the personal, and then you see the economic. And the personal really is that we know that small businesses really make up the soul of a lot of communities. Well, what happens when you rip that soul out and it just doesn't exist? And so there is a legitimate fear that that fabric of community be destroyed by the lack of small business.
Now when you look at data and you look at coming out of the recession, we saw that it took close to 10 years for small businesses to recover. And I think what we've seen, at least with the CARES Act in March, is a dedication to not let that happen and a dedication to push loans to small businesses.
Now, unfortunately that type of bipartisan cooperation stopped on August 8, and it's been heartwarming to see in the last week or so leaders of the Republican Party and the Democrat Party and the White House and President-elect Biden's team coming together to work towards a bipartisan solution, and that's where we are right now. And small businesses really are depending on getting it across the goal line so that they can survive not only through the holiday season but into next year.
KRISTIN MYERS: Now, this report says that 2/3 of small businesses will have to close, while I know another 3/4 say that they are going to need help. How does that change for minority business owners? I know that they are feeling the pain more than some of their other counterparts.
TOM SULLIVAN: Yeah, Kristin, thank you for bringing that up. Our data is alarming in itself. I mean, it is terrifying to see that 62% of small businesses who we surveyed said that the worst is yet to come.
But when we really dug into the data to see how minority-owned small businesses are doing, unfortunately it's an even worse story. We saw early on in the pandemic that small-- about 66% of minority-owned businesses thought that they would have to close without additional help, and that's compared to about 57% of nonminority businesses.
To make it worse, in order to recover, in order to get a bank loan, we saw that 13% of minority-owned businesses couldn't get a loan compared to 8% of the nonminority businesses. So not only are minority businesses hit harder, they actually are having a harder time picking themselves back up when financial aid is available.
And so that's why we're optimistic that Congress not only pass a restart of the PPP program but really help us target in on those small businesses who need it the most, those small businesses like restaurants, hotels, other type of live venues, and, quite frankly, those businesses that have been hurt the worst because-- in the minority community, those who are in communities that are underbanked or nonbanked and really need help at this time. And so Congress has committed to helping those small businesses that need it most get the aid first, and we're doing everything possible to hold them to their word.
KRISTIN MYERS: I'm really glad that you bring that up because we actually had a guest on earlier this week from the Center for Public Integrity. They had done a lot of research about those loans that went out to small businesses in the first round of stimulus, and they found just what you were highlighting here, that those businesses that are in underserved communities that were supposed to be prioritized the first time around weren't. And as you mentioned, they experienced a lot of difficulties and hurdles in accessing those loans. Are you more optimistic that something will change in this second round of stimulus, that somehow this program will be changed so that these businesses can be targeted for the help that they desperately need?
TOM SULLIVAN: Well, Kristin, I am eternally optimistic because I lobby for small businesses, and they are eternally optimistic. So I feel the same way that I do-- that they do, sorry. And I'm optimistic that minority-owned businesses will get the aid that they need quicker because what we saw in March and April was that when SBA went online with PPP, there were only 1,200 banks making the loan. When they shut their doors on August 8, there were over 5,000 banks, minority deposit institutions, and certified development financial institutions-- excuse me, community financial development institutions that specialize in getting capital into underserved communities. And because they are online and they are familiar with the PPP program, I'm much more confident that when Congress passes the restart of the PPP program, those businesses that had a hard time accessing the capital in the first round will have a better chance of getting it in this second round.
KRISTIN MYERS: All right, Tom Sullivan from the US Chamber of Commerce. Tom, always great to have you here with us. Thanks for some of those updates.
TOM SULLIVAN: Thank you.