REGION — Small businesses are starting to feel the long-term anxieties of the COVID-19 pandemic.
Many are worried about the impacts of deferments, loan payments and a lack of consumer buying power to continue their life’s work.
For Megan McIntyre, Brian Seghers and Gordy Haskett, the long-term math doesn’t work out as 90-day deferments by the state and other municipalities and potential loans may crush small businesses once those non-essential stores are allowed to re-open, but no one knows when it will happen.
McIntyre and Seghers each had to temporarily close, while Haskett is doing weekly bake sales for his bakery. All three rent their stores.
“It’s kind of challenging … I’m not assuming I open my doors back up and 100% of business returns,” McIntyre said. “I can foresee it being six months of trying to catch up.”
Several weeks ago, McIntyre closed her four Carlsbad retail clothing shops in the Village (Blue and Shoes, Ragz Revolution, Coolest Shoes in California and Flourish), and Under the Willow in Temecula. She said piling up debt and expecting customers to return as they did pre-pandemic is unrealistic.
McIntyre applied for the federal Payroll Protection Plan, although Haskett, who owns Gordy’s Bakery in Encinitas, said he could not because he can’t meet the 75% requirement for payroll for his furloughed employees.
McInytre said 25% of the PPP can be used for rent, but in California, rents are much higher than elsewhere in the country. She’s also opened up other lines of credit but acknowledged climbing out of debt will be challenging.
“It’s not even a month,” she said. “The 25% may cover two (stores) for a month and I’ll have to come up with the rest. It’s going to be really hard. Just because they can’t evict me today doesn’t mean they can’t evict me after 90 days. Everyone is nervous.”
Seghers, who owns 454 Tattoo and Body Piercing in Encinitas and another tattoo shop in Redlands, said he’s been in contact with Encinitas Councilwoman Kelly Hinze about potential relief from the city.
And while the city has yet to announce any plans, Seghers said he can avoid any deferments or loans for about six months as he socked away money after learning lessons from the 2008 Great Recession.
Still, his worries center on the long-term impacts, notably for consumers with less buying power after the pandemic. About 2.3 million California residents have applied for unemployment benefits from March 12 through April 7, according to the Orange County Register.
Seghers, McIntyre and Haskett said there is no guarantee for how many of those jobs will return.
“They can’t take the chance at spending any more money,” Seghers said. “Those getting rent deferred … there also taking out loans. They’re going to have to pay back their rent, the loans with interest and then also make their current rent on top of having to pay for goods and services.”
He said small businesses may re-open with two or three times the overhead costs, thus putting them in a difficult financial position. Seghers said it may come down to the tenant-landlord relationship and coming to a mutually beneficial agreement regarding rent.
Hasket applied for the Small Business Administration Disaster Relief fund, but he’s trying not to defer any payments while being charged 100% for April’s rent.
“You’re just burying yourself in debt,” Haskett said. “If I start digging that hole, it’ll be deeper and deeper. You don’t make a lot of money with a small business.”