Most US small businesses have only days to stay afloat as the coronavirus crisis takes its toll: 'My business can just disappear'

Alicia Villanueva, owner of Alicia's Tamales Los Mayas, and her workers

  • Many small businesses can only stay afloat for days as they reel from the coronavirus crisis and the shelter in place policy in many areas.
  • A recent JP Morgan study estimated that more than half of the 30 million small businesses in the US have only 15 days of cash reserves to survive.
  • For many businesses, "revenue could easily be zero right now across the state of California, and increasingly in other states as well," Gwendy Brown, a vice president at Opportunity Fund, a nonprofit small business lender, told Business Insider.
  • Alicia Villanueva, owner of Alicia's Tamales Los Mayas in San Francisco, said she is barely hanging on, after revenue quickly evaporated due to the crisis. "My business can just disappear," she told Business Insider.
  • Visit Business Insider's homepage for more stories

Alicia Villanueva, owner of Alicia's Tamales Los Mayas in San Francisco, used to sell thousands of tamales a week at Chase Center, home of the Golden State Warriors, as well as to Google, Facebook, and other tech giants.

But her business has ground to a halt, as a result of the shelter in place policy aimed at stopping the spread of coronavirus. Villanueva, a native of Mexico, said time is running out for her small business.

"My business can just disappear," she told Business Insider. "If I don't look for more jobs, I don't think I can survive more than two months."

Most small businesses in the US may have even less time. More than half of the 30 million small businesses in the US typically have only 15 days worth of cash reserves to stay afloat, according to a JP Morgan report published this month.

The shelter-in-place orders in California and other states simply caused business to grind to a halt in many industries, from restaurants, landscaping to personal services, such as acupuncture clinics and salons. In San Francisco, for example, revenues at city businesses have plunged up to 70%, said Gwendy Brown, research vice president at Opportunity Fund, a nonprofit small business lender.

"Depending on what industry you're in, revenue could easily be zero right now across the state of California, and increasingly in other states as well," she told Business Insider.

Small businesses, which employ nearly 60 million people, or roughly half of the private US workforce, are expected to take a hard hit in the economic slowdown, similar to what many of them endured in the Great Recession a decade ago.

They are even "more financially vulnerable" than average full-time American employees, Brown said. Many of them were already "operating on razor thin margins" even before the crisis hit.

"In many cases, this is the sole income for their household," she said. Many of them are employers like Alicia's Tamales which has a full-time staff of 24 employees.

'I just want to be able to pay the salaries of my employees'

The food catering business was thriving with big customers like Chase Center and the tech companies before the pandemic led to the slowdown. Now her main concern is making payroll, Villanueva said.

She reluctantly had to cut her employees' hours to five a day. "I'm really trying my best to give them five hours a day, because I don't want to say to one of them, 'you come tomorrow," she said. "The most important thing for me right now is not profits. I just want to be able to pay the salaries of my employees."

The US Small Business Administration has an economic disaster loan program that could provide loans of up to $2 million.

But Brown of Opportunity Fund said SBA loan programs typically have stringent requirements that many firms, particularly mom and pop shops, may not be able to meet. Applying for an SBA loan can take weeks, even months, time that many small businesses reeling from the downturn do not have.

She said the Trump Administration's economic bailout proposal is focused on bigger businesses, such as the airlines, "not on the Alicias of the world, for whom an SBA loan is not a viable option for now."

Other options have emerged. Villanueva bought some time for her business last week when venture capital investor Greg Avis, managing partner at Bagtail Partners, and his wife, Anne, working with Opportunity Fund, hired Alicia's Tamales to provide 1,000 meals a week for 200 students at Eastside College Preparatory School in East Palo Alto. Opportunity Fund plans to use that partnership as a model to help other small businesses.

"I'm very happy to do this service for these beautiful kids," Villanueva said. "I'm just trying to be positive, to be very persistent and every single day try to find a way to sell my product."

Got a tip about? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.

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