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Survey: 70 percent of small businesses say they are bracing for COVID-19 resurgence

Fifty-six percent report that they believe it will take six months to a year before the small business climate returns to normal.

Brandon Moseley

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The U.S. Chamber of Commerce reported Wednesday that the economic recovery is faltering amid growing concerns about a “second wave” of the pandemic. The small business recovery sputtered in recent weeks, according to a new poll of small business owners taken between July 9 and 16 released by the U.S. Chamber of Commerce and MetLife.

According to the polling, after retreating from record lows earlier this spring, key measures like perceived business health and cash flow have stalled, and the number reporting concerns around reopening guidance has increased. Despite this, small business owners remain unyieldingly optimistic with regards to future revenue and bullish on hiring and investment plans, the survey found.

Of those surveyed, 55 percent of small businesses are reporting good overall health. This is down 14 percentage points from the end of 2019. The number of small businesses that say they are in poor health has held flat at 18 percent over the month. It is double the number (9 percent) that reported the same at the beginning of 2020 prior to the pandemic; 45 percent are reporting they are not comfortable with their cash flow. This is three times higher than pre-pandemic levels.

“Small businesses face a cash flow crunch that is making it difficult for them to pay rent, payroll, and utilities,” said Tom Sullivan, U.S. Chamber vice president of small business policy. “It’s a long road to recovery, and these businesses are being tested like never before. Despite these considerable headwinds, our poll finds small businesses will innovate and fight their way to better days.”

Despite the stall around key measures of business health on Main Street, there are results showing cause for optimism. According to the poll, 86 percent of small businesses report that they have either fully or partially reopened since the pandemic began. The number of fully open businesses has climbed 11 percentage points since May.

53 percent reported that they expect next year’s revenues to increase. This is up from 50 percent in May and 47 percent from April. Just 18 percent of business owners expect their revenues to decrease next year. 35 percent of small business owners report that they are now more likely to increase investments in the upcoming year. This is up eight percentage points from May. This is nearly double the number that report plans to reduce investments (18 percent).

“We know concerns remain among small businesses as they contemplate future spikes and a potential second wave of the virus,” said Jessica Moser, senior vice president, Small and Specialty Business at MetLife. “But the fact that 55% of owners say that their businesses are in good health and 53% say they expect next year’s revenue to increase, leaves room for some cautious optimism for the future.”

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60 percent of small businesses report maintaining the same size staff over the last year. This is down from 67 percent in May. 20 percent report increasing staff. This is up from 13 percent in May. 30 percent however say that they anticipate increasing staff in the next year. This is up seven percentage points since late May). 29 percent report that they have adjusted their employee salaries or hours in response to the pandemic.

78 percent of small businesses remain concerned about the impact of coronavirus on their businesses. 65 percent are concerned that they will have to close again or stay closed if there is a second wave of COVID-19. Among those who have already had to endure a COVID shutdown, 85 percent report being concerned about a second wave. Small businesses in the South are the region most concerned about a second wave – 72 percent. The industry most concerned is the service industry at 72 percent.

Seventy percent of small business owners report they have adjusted business operations to prepare for a second wave of COVID-19 and a second wave of business interruptions. 30 percent report that they have been evaluating long term staffing plans or making plans for future layoffs to prepare for a second wave. 32 percent report that they are purchasing additional supplies to prevent shortages for another business interruption. 29 percent report that they are updating their website and/or social media profile(s) to prepare for a second business interruption. 25 percent report that they are ncreasing e-commerce or digital payment options.

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56 percent of small businesses expressed concern over the lack of guidance on proper reopening procedures. This is up eight percentage points from the previous report released in June.

“As America’s businesses look to reopen safely and keep their employees and customers healthy, employers are facing unprecedented new challenges and are looking for certainty from our elected leaders,” Sullivan said. “Main Street needs assurances from Washington that small business will remain a priority in rebuilding America’s economy. It’s a long road to recovery, but SBA loan assistance and nation-wide liability protections will help small businesses get back up and running at full speed.”

56 percent report that they believe it will take six months to a year before the small business climate returns to normal. This is in line with late May’s 55 percent. 7 percent responded that they think that it will never return to normal.

The Small Business Coronavirus Impact Poll is a special monthly coronavirus report, separate from the quarterly MetLife & U.S. Chamber of Commerce Small Business Index.

The U.S. has had 4,568,375 coronavirus cases thus far in the global pandemic. 153,848 Americans have already been killed by COVID-19, including 1,489 in Alabama. 2,245,521 have recovered from their illnesses.

Brandon Moseley is a senior reporter with eight and a half years at Alabama Political Reporter. You can email him at [email protected] or follow him on Facebook. Brandon is a native of Moody, Alabama, a graduate of Auburn University, and a seventh generation Alabamian.

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Economy

New unemployment claims continue to drop

Micah Danney

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There were 11,692 unemployment claims filed in Alabama last week, down from 17,439 the previous week, according to the Alabama Department of Labor.

Seventy-six percent of the claims from July 26 to Aug. 1 were related to COVID-19, according to the Alabama Department of Labor. That compares to 89 percent the week before.

New claims increased over the first half of July but declined in the second half.

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Economy

Alabama Power is returning $100 million to customers

Brandon Moseley

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The Alabama Public Service Commission approved a plan Tuesday to credit Alabama Power Company customers on their October bills. The move returns approximately $100 million to Alabama Power Company customers.

“Putting money back into the pockets of hard-working Alabamians is one of the ways we can help on the road to recovery,” Public Service Commission President Twinkle Andress Cavanaugh said on social media. “Alabama Power to refund $100 million to customers.”

The typical Alabama Power customer will receive a $25 credit on their October bill. The newly approved credit is on top of a 3 percent rate reduction that customers are already enjoying in 2020. This previous rate cuts and the October credit amount to about $300 million in savings for Alabama Power customers this year.

“We appreciate the commission voting today to expedite this credit for our customers,” said Richard Hutto, Alabama Power’s vice president of regulatory affairs.

The global economic collapse due to the COVID-19 pandemic has hurt people across Alabama. It has also dramatically lowered fuel costs for Alabama Power Company’s plants.

A typical residential customer using 1,000 kilowatt-hours of electricity per month is expected to receive a credit of $25. Customers who use more energy will receive a larger credit. Customers who use less power receive a smaller credit but had a smaller bill to begin with. Adjustments to fuel costs are typically calculated at the end of the year, with savings passed to customers beginning in January, but due to the economic downturn and pandemic-related job losses, Alabama Power and the PSC are rushing that money to Alabama families and businesses.

“Many of our customers have been hurt by COVID-19. We hope this credit will provide some additional relief at this difficult time,” Hutto explained.

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The 3 percent rate reduction, that took effect in January, was based on earlier estimates of lower costs for fuel and other expenses for 2020. The rate reduction alone equates to about a $4.50-per-month reduction for the typical residential customer.

“Our employees are working every day to keep costs low while providing industry-leading reliability for our customers,” Hutto added.

Alabama Power said in a statement that their total retail price is below the national average and has been for decades. When adjusted for inflation, the price customers pay for electricity is lower today than it was 30 years ago.

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Alabama Power has been assisting customers in other ways during the COVID-19 outbreak. Since the start of the pandemic, the company has suspended disconnects and late payment fees for customers hurt by the coronavirus.

Cavanaugh is seeking another term as president of the Commission.

“It is crucial that we have strong pro-jobs conservatives supporting President Trump’s agenda at all levels of government,” Cavanaugh said on social media.

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Economy

Payroll Protection Program deadline has been extended to Saturday

Brandon Moseley

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Congresswoman Martha Roby, R-Montgomery, this week reminded business owners that the deadline to apply for the Payroll Protection Program, knowns as the PPP, has been extended to Saturday.

“The Small Business Administration’s Paycheck Protection Program (PPP) application deadline was recently extended to Saturday, August 8,” Roby wrote in an email to constituents. “Do not forget to fill out your application if you are a small business that has been impacted by the Coronavirus pandemic.“

The PPP was a loan program administered by the Small Business Administration. It was part of the bipartisan CARES Act to address the economic collapse caused by the COVID-19 global pandemic and the forced economic shutdowns, which were implemented in the early months of the public health emergency in an attempt to slow the spread of the novel strain of the coronavirus and allow public health agencies and health care systems time to build up testing, contact-tracing and hospital bed capacity.

The PPP loans are 1 percent interest loans available through the SBA. If the business uses the money to make payroll and pay standard operating expenses then the loans will be forgiven. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers.

The PPP has been very popular, so much so that that program ran out of money just weeks after Congress passed it. Congress had to go back and provide more funding for the PPP.

Businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

Senate Democrats are meeting with the Trump Administration, Senate Republicans and House leadership on a compromise plan for a fifth coronavirus relief package. A big point of contention has been the size of the total package. Speaker of the House Nancy Pelosi, D-California, supports a $3.2 trillion coronavirus relief bill while Republicans prefer a more modest $1 trillion relief bill. The two sides are expected to continue to negotiate through Friday in an attempt to reach a compromise before the August recess.

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Roby is serving in her fifth term representing Alabama’s 2nd congressional district. She is not seeking re-election.

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Economy

State’s unemployment claims slowed last week

Last week saw the lowest number of new claims since the week-to-week number first spiked from 1,824 to 10,982 when the lockdown started in mid-March.

Micah Danney

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The number of unemployment claims in Alabama slipped last week after increasing through the first half of July.

There were 17,439 claims filed from July 19 to 25, according to the Alabama Department of Labor. Of those, 15,461, or 89 percent, were COVID-19 related.

Claims soared at the start of the pandemic in late March, hitting a weekly high of 106,739 in the first week of April. The rate of new claims declined sharply in May, with each week counting under 30,000 claims.

Since then, the number has decreased somewhat steadily. Claims rose several thousand over the course of this month, from 19,058 in the week ending July 4 to 23,678 in the week ending July 18.

Last week saw the lowest number of new claims since the week-to-week number first spiked from 1,824 to 10,982 when the lockdown started in mid-March.

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